Pest Analysis of Sainsburys in a 3rd World Country Essay

Interest rate, economical growth, m unitarytary and fiscal policy, flash and the transposition rates are the beta economic factors. These factors play a merry role in a theatres business scheme and decision making. Every realm has its own culture and the area has a strong impact on their living. The loving and cultural influences on business vary from orbit to country. Socialfactors embr crude oil the cultural aspects and accept health consciousness, language, population growth rate, age distribution, career attitudes.Trends in affable factors accept the demand for a companys products and how that company operates. For example, the roles of manpower and women in the society. Furtherto a greater extent, companies may change various management strategies to adapt to these social trends scientificfactors confirm vital place in PEST analysis. few markets are labour intensive and some are capital intensive. expert factors determinebarriers to entry, minimum efficient production level and influenceoutsourcingdecisions.It is oneness of the major drivers of globalization and is the base for competitive advantage. Innovation is offered to the customers or consumers with technology for example internet banking, smart phones etc. It in addition enables the firm to produce a product cheaply and to a better tone in standard. Pakistan is the sixth most populated country in the humanity with over 180 million people. It is estimated that the 25% of the population be foresightfuls to the middle in keep an eye on grade. It is overly estimated that 55% of the Pakistani population is in the 10-40 years age bracket.The swiftness middle-income class is estimated at 17 million with relatively high-pitched per capita income which favours more consumer spending. The average Pakistani consumer spends 42% of his income on intellectual nourishment related products. The coming(prenominal) changes in demographic depart create opportunities and challenges f or businesses in Pakistan. Pakistans food retail sector is unorganised and highly dominated by self-sufficing small stores. Over the past few years, some large European food retailers have opened stores in all major Pakistani metropolitan cities resembling Makro, Metro and Carrefour (Hyper star).Pakistani families are collected towards these stores callable to their strategic location, multiple product range and imported processed food. Studies withal show that on that point has been a shrinkifi foundationt shift to organized order of shopping from conventional format, in urban areas. This provides a challenging and paying opportunity to other food retailers to enter the market. Sainsburys provides convenient shopping under one roof, has wide range of products, consumer friendly environment, large storage and discounted prices.These factors exceed Sainsburys an advantage over other food retailers currently present in Pakistan. If Sainsburys decides to enter in food retai l sector then it has to exercise a PEST analysis. PEST Analysis of Sainsburys in Pakistan Political Factors The political factors revolve around the current government in a country. Currently, in Pakistan, the ruling party is Pakistan Peoples Party which was democratically choose in 2008. Though it is backed by western powers but tacit is considered to be a weak government.The basic questions arise much(prenominal) as how stable is the political or is there any government intercession in the economic policy making or laws and legislation protect the businesses. Unfortunately, due to weak governments in the past, the security and corruption has been the key issues Pakistan has been lining over the the last decade. Which certainly is not a good sign for any foreign investors. However, giants in food-retail sectors like Metro and Carrefour ( hyper star) have set an example with an increasing growth in profit and expansion even in such circumstances.Sainsburys may enter in the Pakistani market with its variety of products which are available under one roof, as the increasing trend in urban areas shows, there will be high demand for it. Political factors may to a fault include the goods and services which the governments want to provide or be provided. Sainsburys collects much of its revenue by selling its wide range of wines and spirits. Pakistani law prohibits the sale or consumption of any type of wines and spirits within its geographical boundaries, Sainsburys will not be allowed to sell it in their stores which may negatively affect their sales.Government of Pakistan ensures that there is foreign investing in Pakistan and it has signed a few trade agreements too. It also provides foreign investors the incentives to invest here. Partial ownership by the Pakistan government usually serves as an insurance policy for the share holders and the investors. Economic Factors Extremely volatile oil prices are the root cause of global financial crisis in Pakis tan which has also worsened the energy crisis. These two factors increase the cost of production.High inflation is a key resultant of it As Sainsburys produce much of its products in stores so they may go beyond their feasible field in producing a product. Interest rates are at their peak, economic growth is quite slow and this is due to the low level of contribute and purchasing power of the consumer is weak. Though it is a labour intensive country and labour supply is quite high and also available at low cost than most other countries but unemployment is rising careless(predicate) of the above mentioned fact. The gap between rich and poor continues to expand and the share of poor is increasing everyday.However relatively quite cheaper labour may do a significant impact in Sainsburys production. It will also bring employment opportunities for young and skilled labour. Heavy loans from financial institutions like IMF and world bank has made the government in debt upto neck and t here are no significant changes in sight. However financial service packages in the name of war on terror and from the friends of Pakistan has kept the providence from collapsing. Pakistan has integrated with global providence and has brought positive impact on economy with increase in GDP.Despite of the worse conditions, Investing in such a country where cheap labour is available and more than half(a) of the countrys population lies in the labour force, targeting middle-income class-keeping the fact in mind that government provides support to private investors would not be a bad decision. Social Factors The culture and religion are very sloshed to each other in Pakistan. As mentioned above this will affect the sales of wines and spirits of Sainsburys as it is not only prohibited by the dominant religion and prohibited by law but the targeted class does not accept it too.Health and Education are the two important sectors for any developing nations and Pakistan lack both of the m and government of Pakistan fails to allocate the postulate budget in both the sectors. However, people like to shop and come with families to the big retail stores. there has been a significant shift from traditional to organized format. The studies show that 11% of the population tend to buy long life food related products in advance for a month. Sainsburys provides a healthy and safe environment to work with,which for a change would attract the people to work and shop here.In comparison to the past, women have also started to contribute in the labor force. Language will be a barrier for the citizens of Pakistan as english is not the first language in Pakistan. Buying imported products is considered a status symbol in Pakistan so there is a high demand for foreign products in Pakistan and is comprehended in the local market. According to studies people spend 42% of their income on food related products. So there will be high demand for a food related products provided by Sains burys. Technological Factors Technological expertise is overflowed in Pakistan as the labour supply and demand for IT professionals is high. in that location has been an improvement in the industrial sector but still the countrys imports are higher(prenominal) than exports. Since it is a labour intensive area and not capital intensive so use of technology higher the cost of production but shift to focus more on labour may help Sainsburys to produce its products relatively cheaper. There is also a trend of buying products online seen. Sainsburys already provides the service of buying its products online which saves much time so the typical 9-5 workforce can also be targeted.