PESTEL ANALYSIS ON EUROPE

INTERNATIONAL BUSINESS ENVIRONMENT

Prepared for:
Dr. Syed Ferhat Anwar
Professor
Prepared by:
Abdullah Atique ZR-03
Maruf Hassan ZR-14
Rakib Khan ZR-32
Arif Faisal ZR-34
Rahimun Anik Haider ZR-43
BBA 20, Section A
Institute of Business Administration
University of Dhaka

Sept 27, 2014

EUROPE

ND
2

SMALLEST CONTINENT

EUROPE

3RD MOST POPULOUS CONTINENT

EUROPE

50 SOVEREIGN STATES

EUROPE

DIVIDED IT INTO 4 SUB-REGIONS

EUROPE

BIRTHPLACE OF WESTERN CULTURE

EUROPE

MAJOR PLAYER IN THE GLOBAL

SCENE SINCE THE RENAISSANCE

PESTEL

POLITICAL

Political Factors

Types of Government

Political Conflicts

European Alliances

Recent Events

Types of Government
Parliamentary democracy
Parliamentary republic
republic

11
3
23

federation

Consitutional monarchy

republic and parliamentary democracy

Dictatorship

Political Conflicts
Dissolution of Yugoslavia and Soviet Union

Crimean Crisis
Kosovo Unrest

Dissolution of Yugoslavia

Dissolution of Soviet Union

Stagnating Economy
Afghanistan Quagmire
Excessive Military Concern

Cherynobyl Disaster

Crimean Crisis
Location of conflict- Crimean Peninsula

Conflict between Russia and Ukraine

Major population of Crimea are Russians, others are Ukrainians and
Crimean Tatars.
Only 5 UN member states, including Russia, have recognized Crimea as a
part of Russia.

Kosovo Conflict
Kosovo- partially recognized state
It is the disputed borderland between Serbia and Albania

European Alliances

European Alliances
Central European Free Trade Agreement
European Free Trade Association
Eurozone
European Union
EU Customs Union
Customs Union of Belarus, Kazakhstan, Russia
NATO

Central European Free Trade Agreement (CEFTA)

Trade agreement between non-EU countries in Southeast Europe.
Current No. of Members: 7 (Albania, Bosnia and Herzegovina,
Macedonia, Kosovo, Moldova, Serbia and Montenegro.
Agreement Focus- Consolidating democracy and free-market
economics.

European Free Trade Association

(EFTA)
A free trader organization between four European countries that
operates in parallel with the EU.
EFTA members- Iceland, Liechtenstein, Norway, Switzerland.
The association looks after the promotion of free trade and economic
integration to the benefit of its four Members.

Eurozone
Economic and monetary union
Eurozone members: 18
Common Currency- EURO

European Union
28 member states

Common ground for laws and

regulations.
Strong relationships within countries.

Perception of Corruption
Denmark has a score of 90.
Greece has a score of 36.
The lower is the score, more
corrupt the nation is.

Freedom of Press
Finland offers the most
freedom of press
Bulgaria is the least to offer
freedom of press

Ease of
Doing
Business

Recent Events
Islamic State Conflict
Britain, Belgium and Demark joining in attack with the US against the
IS forces in Iraq and Syria
Scotland independence
Believing Scotland and England are better off together
Unsure about the future after independence

PESTEL

ECONOMIC

E-Economical Factors

GDP

GDP Growth Rate

GDP Per Capita

EURO Crisis

Central Europe
GDP, GDP per Capita, GDP growth rate
Switzerland has the highest GDP (PPP) standing at $371,200,000,000 and GDP
growth rate of 2% (2013 est.)
Contributing factors for Switzerlands high GDP- Watches, Industrial,
Agriculture, Trade and Tourism.
Liechtenstein has the highest GDP per capital at $89,400.
Factors contributing for Liechtenstein- tax policy, free market economy.

Northern Europe
GDP, GDP per Capita, GDP growth rate
United Kingdom has the highest GDP of $2,387,000,000,000. Its service
sector makes up for 73% of its GDP.
Norway has the highest GDP per capital of $55,400. The contributing
factor is the countrys control power of the oil of North Sea.
Latvia has the highest GDP growth rate of 4%.
Contributing factors of the high GDP growth rate- geographical location
allowing the transit services to be highly developed, ranks 21st in the Ease
of Doing Business Index.

Southern Europe

GDP, GDP per capita, growth rate

Highest GDP- Spain- $1,389,000,000,000
Contributing factors for Spain- banking system, service sector
contribution, steady exports.
Highest GDP Growth Rate-Turkey - 3.8%
Contribution factor for Turkey- world's leading producer of agricultural
products; textiles; motor vehicles, ships and other transportation
equipment; construction materials; consumer electronics and home
appliances.
Highest GDP Per Capita- Andorra- $37,200
Contributing factors- trade and tourism, tax policy.

Eastern Europe
GDP, GDP per capita, GDP growth rate
Highest GDP- Russia- $2,553,000,000,000
Contributing Factors for Russia- Service and Industrial Sectors ( 60.1%
and 36% contribution respectively)
Highest GDP Per Capita- Slovenia- $27,400
Contributing Factors for Slovenia- highly educated workforce, welldeveloped infrastructure, and is situated at a major transport crossroad.
Highest GDP Growth Rate- Moldova- 8.9%

Western Europe
GDP, GDP per capita, GDP growth rate
Highest GDP- Germany- $3,227,000,000,000
Highest GDP per capita- Monaco- $85,500
Highest GDP Growth Rate- 0.9%

European Union

Economic Freedom
Denmark ranks top
among the EU countries
in terms of Economic
freedom (Economic
Freedom Index, WSJ)
Economic freedom is
calculated keeping trade
policy and government
intervention in mind.

Income Equality
Denmark ranks top in terms
of income equality.
Portugal has the least income
equality.

Unemployment Rate
Eurozone- 12% (2014)
EU- 10.8% (2014)
Bosnia and Herzegovina44.3% (2013)
Macedonia- 28.2%
(2014)
Greece- 27.9% (2013)
Spain- 26.3% (2013)

Euro Crisis
Started in Early 2009
Main issues shaping the crisis:
Weak actual and potential growth
Competitive weakness
Liquidation of banks and sovereigns
Large debt-to-GDP ratios
Considerable liability stocks (government, private, and non-private
sector

Euro Crisis

PESTEL

SOCIAL

TOPICS COVERED

Population Statistics
Ageing of European Population
Religion in Europe
Ethnic Groups
Language in Europe
Education
Healthcare
Human Development Index (HDI)

Total Population (2014)

Population of Europe is 741.2 Million which is
around 11% of the World Population
In terms of Population, Europe is Ranked 3rd
behind Asia and Africa

Source: World Population Prospects: The 2012 Revision

Top 10 Most Populated Countries

Country

Population

European Ranking

World Ranking

Russia

142,470,272

10

Turkey

81,619,392

17

Germany

80,996,685

18

France

66,259,012

22

United Kingdom

63,742,977

23

Italy

61,680,122

24

Spain

47,737,941

29

Ukraine

44,291,413

32

Poland

38,346,279

35

Romania

21,729,871

10

58

Source: CIA World Factbook, July 2014 Estimate

Population in the European Union

Population of European Union is 511.4 Million
which is 69% of the Total European Population
Two most populated countries Russia and
Turkey are NOT part of the European Union

Top 10 Most Densely Populated

Country

Population Density (Per

Sq. km)

European Ranking

World Ranking

Monaco

18,475

Malta

1,321

San Marino

531

21

Netherlands

406

30

Belgium

367

35

United Kingdom

262

51

Liechtenstein

230

57

Germany

226

58

Luxembourg

208

60

Italy

202

10

61

Source: United Nations Department of Economic and Social Affairs

Top 10 Least Densely Populated

Country

Population Density (Per

Sq. km)

European Ranking

World Ranking

Iceland

3.15

51

233

Kazakhstan

6.31

50

225

Russia

8.42

49

222

Norway

15.6

48

207

Finland

18

47

199

Sweden

21.5

46

194

Estonia

30.2

45

184

Latvia

31

44

182

Lithuania

45

43

164

Montenegro

45

42

165

Source: United Nations Department of Economic and Social Affairs

Population Density
Monaco is the most densely populated
sovereign nation in the world with 18,475
people living per square kilometer
Russia, the largest country in Europe in terms
rd
of both area and population, is the 3 least
densely populated country in Europe
Source: CIA World Factbook, July 2014 Estimate

Population Growth Rate (Top 10)

Country

Population Growth Rate

European Ranking

World Ranking

Cyprus

1.48%

82

Ireland

1.20%

99

Norway

1.19%

101

Kazakhstan

1.17%

103

Luxembourg

1.12%

108

Turkey

1.12%

109

Azerbaijan

0.99%

121

Kosovo

0.93%

125

San Marino

0.87%

127

Liechtenstein

0.82%

10

134

Source: CIA World Factbook, July 2014 Estimate

Population Growth Rate (Bottom 10)

Country

Population Growth Rate

European Ranking

World Ranking

Moldova

-1.02%

51

231

Bulgaria

-0.83%

50

229

Estonia

-0.68%

49

228

Ukraine

-0.64%

48

226

Latvia

-0.62%

47

225

Montenegro

-0.49%

46

223

Serbia

-0.46%

45

221

Romania

-0.29%

44

218

Lithuania

-0.29%

43

216

Slovenia

-0.23%

42

215

Source: CIA World Factbook, July 2014 Estimate

Population Growth Rate

Cyprus, the fastest growing country in Europe,
is not even in the top 80 fastest growing
countries in the world
Interestingly, the bottom 10 countries are all
ex-communist states

Projected Population (2050)

Continent

Africa
Asia
Europe
Latin America &
Caribbean
North America

Projected
Population (2050)
2.4 billion
5.2 billion
709 million
782 million

Percentage of
Global Population
(2050)
25%
55%
7%
8%

446
million
5%The 2012 Revision
Source:
World Population Prospects:

Ageing of the European Population

European countries had Nine of the Top Ten
highest median ages in national populations in
2005. Only Japan had an older population.
The U.S. Census Bureau estimates the
European Union will experience a 14%
decrease in its workforce and a 7% decrease in
its consumer populations by 2030.

Religious Belief in Europe

Believe in God- 51%
Believe there is some sort of spirit or life
Force- 26%
Do not believe there is any sort of spirit, god
or Life Force- 20%
Declined to answer- 3%
Source: The Euro barometer Poll, 2010

Islam in Europe
The total number of Muslims in Europe is
about 44 million (6%) excluding Turkey
The total number of Muslims in the European
Union in 2010 was about 19 million (3.8%)

Source: Pew Forum, 2010

Ethnic Group in Europe

1.
2.
3.
4.
5.
6.
7.
8.

Russians (ca. 95 million residing in Europe)

Germans (ca. 82 million)
French (ca. 65 million)
Italians (5661 million)
British (55 million)
Spanish (4143 million)
Ukrainians (3855 million)
Poles (ca. 38 million)

Languages of Europe

German (90 Million)

Russian (82 Million to 95 Million)
French (80 Million)
English (67 Million)
Italian (60 Million)

Literacy Rate
Andorra, Finland, Liechtenstein, Luxembourg,
and Norway have 100% Literacy Rate
43 Countries have 95% to 99.99% literacy rate
Malta and Kosovo have literacy rates of
92.80% and 91.90% respectively
Source: CIA World Factbook, July 2014 Estimate

Healthcare (Top 10 Countries)

Country

European Ranking

World Ranking

France

Italy

San Marino

Andorra

Malta

Spain

Austria

Norway

11

Portugal

12

Monaco

10

13

Source: World Health Organization

Healthcare (Bottom 10 Countries)

Country

European Ranking

World Ranking

Russia

45

130

Georgia

44

114

Azerbaijan

43

109

FR Yugoslavia

42

106

Latvia

41

105

Armenia

40

104

Bulgaria

39

102

Moldova

38

101

Romania

37

99

Bosnia-Herzegovina

36

90

Source: World Health Organization

Healthcare
Top 5 Best healthcare Countries in the world
(France, Italy, San Marino, Andorra, Malta) are
in Europe
Former Communist States in East and Central
Europe have the worst Healthcare systems

HDI by Country (Top 10)

Country

HDI

European Ranking

World Ranking

Norway

0.944

Switzerland

0.917

Netherlands

0.915

Germany

0.911

Denmark

0.900

10

Ireland

0.899

11

Sweden

0.898

12

Iceland

0.895

13

United Kingdom

0.892

14

Liechtenstein

0.889

10

18

Source: Human Development Report, 2014

HDI by Country (Bottom 10)

Country

HDI

European Ranking

World Ranking

Moldova

0.663

51

114

Albania

0.716

50

95

Armenia

0.73

49

87

Bosnia and Herzegovina

0.731

48

86

Macedonia

0.732

47

84

Ukraine

0.734

46

83

Georgia

0.744

45

79

Serbia

0.769

44

77

Azerbaijan

0.747

43

76

Turkey

0.759

42

69

Source: Human Development Report, 2014

PESTEL

TECHNOLOGY

GLOBAL INNOVATION INDEX

GLOBAL INNOVATION INDEX

10 out of top 15
countries are from
Europe
Top 5 are European
countries

INTERNET

68.6%
20%

Internet penetration
Accounts for

of the worlds internet users

INTERNET

10 countries with most internet users

INTERNET
Iceland

96.50%

Norway

96.15%

Denmark

96.08%

Netherlands

96.08%

Luxembourg

95.05%

6 countries with most internet penetration

INTERNET

Poland

67.15%

Bosnia and Herzegovina

67.52%

Lithuania

70.25%

Slovenia

72.32%

Hungary

74.38%

Spain

74.38%
Internet penetration those in the middle

INTERNET
Ukraine
Malta
Armenia
Moldova
Turkey
Serbia
6 countries with least internet penetration

37.49%
40.22%
43.57%
44.81%
46.62%
49.69%

INTERNET SPEED

INTERNET SPEED

7 of the top 10 countries are from Europe

SMARTPHONE USAGE
Norway

67.5%

Sweden

62.9%

United Kingdom

62.2%

Denmark

59.0%

Ireland

57.0%
Global is 25%
*2013 data

HI-TECH EXPORTS
Germany

$183,354,358,704

France

$108,364,773,852

United Kingdom

$67,786,969,582

Netherlands

$63,963,116,660

Switzerland

$50,101,572,777
*2011s data

RESEARCHERS IN R&D
Finland

7,423

Iceland

7,012

Denmark

6,806

Luxembourg

5,814

Norway

5,508

Sweden

5,142
* Per million people
** 2011s data

R&D EXPENDITURE
Finland

3.79677

Sweden

3.38709

Denmark

2.97599

Germany

2.89286

Austria

2.76578

Iceland

2.60487
* % of GDP
** 2011 data

PATENTS
Germany

61,340

Russian Federation

44,211

United Kingdom

23,235

France

16,632

Italy

9,310

Ukraine

4,955
* Patent applications
** 2012 data

BIGGEST INDUSTRIES
Automobile industry
Aerospace
Defense
Chemicals
Biotechnology
Food

AUTOMOBILE INDUSTRY

Total motor vehicles (world)

Total motor vehicles (EU27)

19%
of world production

84.1m units
16.2m units

718.7 bn

TRENDS
Advertising
Mobile
Purchase
Faster communication
---------------------------------------------------------------------------------------------------------------------Cloud
Get everything, everywhere
---------------------------------------------------------------------------------------------------------------------Green Technology

PESTEL

ENVIRONMENT

TOPICS
Some figures to get you started
Consumer mentality and behavior
Temperature analysis
Snowfall levels
Carbon Dioxide (CO2) emission
General effects and impacts on business

ENVIRONMENT

Are They Aware?

It is good to see such solid and widespread support
for the protection of the environment, even in difficult
times. People are particularly concerned about air
and water pollution, chemicals and waste, and they
feel that more must be done by everyone to protect
the environment.
ENVIRONMENT

- Janez Potonik
European Commissioner for Environment

Environmental Protection and Economic Sense

74 %

people think protection of the environment can boost economic

growth

80 %

consider that the economy influences their quality of life

75 %

think the state of the environment has a similar impact

77 %

of EU citizens believe that environmental problems have a direct

effect on their daily lives

ENVIRONMENT

Source: Eurobarometer Survey 2014

A couple more figures

59 %
people believe that social and environmental factors should be as important
as economic criteria in measuring progress in their country

In relation to the spending and investment

of public authorities

ENVIRONMENT

59 %

people think that the public authorities of

their country should favor environmentally
friendly considerations over cost

Source: Eurobarometer Survey 2014

Consumer Mentality
ready to buy environmentally-friendly products,
even if it means paying a little more

93 %
ENVIRONMENT

75 %

think that big polluters should make good the environmental damage
they cause. Introducing heavier fines for offenders was deemed the
most effective way of tackling environmental problems

Source: Eurobarometer Survey 2014

Consumer Behavior

85 %

of Europeans believe they have a role to play in

protecting the environment
And people do so by the following 3 activities

cutting down energy consumption

72 %
52 %

cutting down water consumption

37 %

separation of waste for recycling

ENVIRONMENT

Source: Eurobarometer Survey 2014

What About Businesses?

77 %

feel that big companies and industry are not doing enough

75 %

say they are ready to buy environmentally-friendly products,

even if it means paying a little more

ENVIRONMENT

Source: Eurobarometer Survey 2014

Temperature

ENVIRONMENT

City

Average daytime temperature round

the year (degrees C)

Stockholm

10.0

Minsk

10.6

London

14.8

Budapest

15.0

Paris

15.5

Bucharest

16.5

Barcelona

20.0

Rome

20.4

Lisbon

21.5

Athens

22.3

Valencia

22.3

Malta

23.2

Source: Wikipedia

Snowfall

7 & 11 %

7%

decrease in snow cover extent in March and April respectively during the past
4 decades in northern hemisphere.
In winter and autumn no significant changes have occurred.
decrease in snow mass in northern hemisphere in March
From 1982 to 2009
In winter and autumn no significant changes have occurred.
Model simulations project widespread reductions in the extent and duration
of snow cover in Europe over the 21st century. However, there are large
uncertainties in the projections.

ENVIRONMENT

Source: Europpean Environment Agency

ENVIRONMENT

Source: Europpean Environment Agency

Carbon Dioxide Emission

ENVIRONMENT

Source: Europpean Environment Agency

Alternative Renewable Energy

General Effects
AGRICULTURE

changes in temperature, rainfall etc will pose a risk of declining yields

HUMAN HEALTH

increase in temperature, natural disasters (tornadoes) and sea level

rise may lead to more water-borne diseases and can cause deaths

BIODIVERSITY

impacts from natural disasters may produce greater risks in terms of

water supply and food security

EFFECT ON SEA
ADJACENT COUNTRIES

ENVIRONMENT

natural disasters and tornadoes may cause damage to the

infrastructure

Incidents
2003

2007

EUROPE

hottest summer in at least 500 years

70,000 deaths

GREECE

hottest summer since 1891

wildfires

2010

RUSSIA

hottest summer since 1500

(Russian heat wave)

2011

FRANCE

hottest and driest spring since 1880

ENVIRONMENT

55,000 deaths
Grain harvest down by 25%
Ban on wheat exports
1% GDP lost

Grain harvest down by 12%

Source: Wikipedia

Impacts on Business
RISKS TO CORE BUSINESS FUNCTIONS
Damage to physical structures and assets e.g. production facilities
Increased costs of operations

RISKS TO THE VALUE CHAIN

Availability of production units
Changing consumer demands
Availability and quality of natural resources water, utilities, logistics networks etc.

RISKS TO LOCAL COMMUNITIES

Affects the livelihood of local communities
Directly impacts corporate community investment programs

ENVIRONMENT

Businesses Likely to be Affected

BUSINESSES DEPENDENT ON WEATHER SENSITIVE RESOURCES
agriculture, forestry, fishing, aquaculture and tourism.
BUSINESSES WITH EXTENDED SUPPLY CHAINS
businesses that rely heavily on logistics and supply networks.
GLOBAL BUSINESSES
global supply chains are easily disrupted by problems in any
link in the chain.
MSMEs
the impact of natural disasters can put these enterprises out
business

ENVIRONMENT

one

of

PESTEL

LEGAL

EMPLOYMENT LAW
EU Labor Law covers 2 main areas:
Working conditions - working hours, part-time & fixedterm work, posting of workers,

Informing & consulting workers about collective

redundancies, transfers of companies, etc.

EMPLOYMENT LAW
The EUs Working Time Directive (2003/88/EC) requires EU countries
to guarantee the following rights for all workers:
a limit to weekly working hours, which must not exceed 48 hours
on average, including any overtime
a minimum daily rest period of 11 consecutive hours in every 24
a rest break during working hours if the worker is on duty for
longer than 6 hours

Working Time

TAXATION IN EUROPE
EU remains a high tax area
The tax-to-GDP ratio exceeded pre crisis levels in 2012 and is set to
continue growing in 2013
Wide disparities in tax levels across Member States
Efficient tax system

DISPARITY IN TAX LEVELS IN MEMBER COUNTRIES

TAX REVENUES ARE RISING

CORPORATE TAX

PERSONAL INCOME TAX RATES

VAT STANDARD RATES ARE RISING

ENVIRONMENTAL TAX

SUMMARY ON TAXATION

INTERNATIONAL TRADE
EU trade policy is working to:
Create a global system for fair and open trade
Open up markets with key partner countries
Make sure others play by the rules
Ensure trade is a force for sustainable development

TRADE BARRIERS
Exports
Bangladesh
Registration, Documentation, Customs Procedures
Canada
Tariff Levels
Tariff Quotas
Quantitative Restrictions and Related Measures
Competition Issues
Government Procurement
Sanitary and Phytosanitary measures
Foreign Direct Investment Limitations
Legislation on Appellations of Origin and Geographic Indications
Enforcement problems on IPR

TRADE BARRIERS
Imports
Tariffs
Duties & taxes on imports of products into specific countries

Procedures and Formalities

Procedures & documents required for customs clearance in the
partner country

JUSTICE, FREEDOM AND SECURITY

Judicial cooperation in civil matters
Judicial cooperation in criminal matters
Police and customs cooperation
Fight against terrorism
Fight against organised crime
Combating drugs