The Pestle Analysis provides an analytical framework that businesses can use to evaluate macro-

environmental factors that impact the organization. Pestle analysis works based on evaluating the

threats and opportunities posed by political, economic, and cultural factors. When implemented

effectively, these factors significantly improve business competitiveness. 

Pestle analysis for Cebu Airline

Cebu Pacific Air, Inc., which operates as and Cebu Pacific (PSE: CEB), is a low-cost Philippine

airline based on Mactan-Cebu International Airport (MCIA Terminal 2), Lapu-Lapu City, Metro

Cebu, Philippines. Founded in 1988, it offers both domestic and international scheduled flights.

The fundamental bases include Mactan-Cebu International Airport, Cebu International Airport,

and Ninoy Aquino International Airport, Manila, with other hubs at Clark International Airport

and Kalibo International Airport.

Political Factors

 The political factors play a considerable role in transnational corporations' investment decisions

and companies such as – Cebu Gokongwei. The political environment and other factors impact

not only the cost of doing business but also long term sustainability. Some of the political factors

are – governance system, democracy & institutions, military coup chances, probability of armed

conflict, law, and order in the market.

 Political Factors that Impact Cebu Pacific Air (D)

 - Role of Non-Government Organization, Civil Society & Protest Groups – The country has a

vibrant civil society community, and Cebu Gokongwei should build bridges with them and seek
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out areas of co-operations. Civil society groups are influential not only in policymaking but also

in building a society-wide narrative.

 - Transition of Government and Changes in Policy – There is consistency in policymaking from

one government to another. Secondly, governments from all parties adhere to the treaties made

by the previous governments.

 - International Trade & Other Treaties – The country has a good record of adhering to

international treaties it has done with various global partners. Each party's government has

adhered to the treaties done by previous governments, so there is consistency in both rule of law

and regulations.

 - Role Local Governments Play – Local governments are highly influential in the policymaking

process and implementation. Most of the local government's policies and regulations as

enforcement agencies mostly report to local government in their states regarding various laws.

Economic Factors 

 Economic factors of a country and region directly impact the potential attractiveness of a given

market. Some of the economic factors that Cebu Gokongwei should evaluate both in the present

market and one in which it wants to enter are – inflation rate, GDP growth rate, disposable

income level.

 Economic Factors that Impact Cebu Pacific Air (D)

 - Level of Household Income and Savings Rate – Increasing consumption and stagnant

household income in the United States had led to credit binge consumption. It has decimated the

culture of savings as people do not have enough to save. Cebu Gokongwei needs to be careful

about building marketing strategies dependent on "Purchase on Credit" consumer behavior.

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 - Financial Market Structure and Availability of Capital at Reasonable Rates – The quantitative

easing policy of the Federal Reserve has led to liquidity flooding all across the global financial

markets. Cebu Gokongwei can borrow cheaply under such circumstances. Nevertheless, this

strategy entails risks when interest rates go up.

 - GDP Trend & Rate of Economic Growth – The higher GDP growth rate signals growing

demand in the economy. Cebu Gokongwei can leverage this trend by expanding its product

range and targeting new customers. One way to start is by closely mapping the changes in –

consumer buying behavior and emerging value proposition.

 - Fiscal and Monetary Policies – The Republican government tax break culture has increased the

deficit, and it can lead to financial trouble for the economy in coming years.

 Demand Shifts from Goods Economic to Service Economic – The share of services in the

economy is continuously increasing compared to the share of manufacturing, goods, and

agriculture sectors.

 - Employment Rate – If the employment rate is high, it will impact Cebu Gokongwei strategies

in two ways – it will provide enough customers for Cebu Gokongwei products, and secondly, it

will make it expensive for Cebu Gokongwei to hire talented & skillful employees.

 Consumer Disposable Income: The country's household income has continuously increased in

the last decade and a half, compared to the USA market, where household income is still below

2007 levels and has not increased in real terms since the early 1980s. Cebu Gokongwei can

leverage this trend to expand the market beyond its traditional customers by employing a

differentiated marketing campaign.

 
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Social Factors

Social factors such as demography trends, the power structure in society, and women's

participation in the workforce have an immense impact on the country's economy and workforce

talent availability and consumer demand level.

  Social Factors that Impact- Cebu Pacific Air (D)

  Gender Composition in Labor Market Cebu Gokongwei can use the gender composition of the

labor market to understand the level of liberal nature of society, women's rights, and women's

say in societal issues consumption decisions. The gender composition of the labor market is a

good indicator of the disposal income of households, priorities of the households, and related

needs.

 - Types of Immigration & Attitude towards Immigrants – Given the latest developments such as

Brexit and Immigrant detention on the Southern border of the United States. Attitude towards

immigration has come under sharp focus. Cebu Gokongwei should have the capabilities to

navigate under this hypersensitive environment.

 - Attitude towards Leisure – Cebu Gokongwei should conduct ethnographic research to

understand both attitudes towards leisure activities and choice of leisure activities. The

experience economy is one of the fastest-growing segments both among millennials and among

baby-boomers.

 - Nature of Social Contract between Government & Society – Before entering into a market,

Cebu Gokongwei needs to understand the nature of the social contract between government and

society. For example, it has been challenging for US companies to enter the UK health market as
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the UK health system is a nationalized system, and everything goes through contracts at the

national level.

 Immigration Policies and Level of Immigration – What are the country's immigration policies,

immigration level, and in which sectors immigration is encouraged; This will enable the Cebu

Gokongwei to determine if required it hire talent globally to work in that particular market.

 - Attitude towards Authority – Various cultures in a different part of the world have different

attitudes towards authority. In Asia, authority is respected, while in the west, it is something to

rebel against. Cebu Gokongwei should carefully analyze the attitude towards authority before

launching a marketing campaign for its products and services.

 - Demographic Trend – The demographic trend is one of the critical factors in the demand

forecasting of an economy. Cebu Gokongwei should consider demographic trends before new

product developments and integrate features that cater to this segment. As the population is

aging, it will require less tech-intensive products.

Technology 

            Technology is fast disrupting business models across various industries. Some of the

technology trends impacting the macro-environment are – developments in artificial intelligence,

machine learning, and big data analytics to predict consumer behavior, the growing importance

of platforms over service providers, etc.

  Technological Factors that Impact Cebu Pacific Air (D)

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 - Acceptance of Mobile Payments and Fintech Services – One of the areas where the US lacks in

China is Mobile Payments. Cebu Gokongwei should assess mobile payments in the local

economy and chose the business model based on it.

 - Research and Development Investment Levels – If there is a high level of investment in the

technology development sector, there are high chances of building a self-sustaining ecosystem

that drives innovation. Cebu Gokongwei can leverage such a situation to hire the best people in

the business.

 - Mobile Phone & Internet Penetration – Cebu Gokongwei should assess the level of internet

and mobile phone penetration in the country as it will it in building a requisite business model

based on local needs and realities.

 - Integration of Technology into Society & Business Processes – Uber failed in China because it

tried to enter before smartphones were widespread in China. Cebu Gokongwei should build a

strategy that can integrate societal values, infrastructure, and the Cebu Gokongwei business

model.

 - Likelihood of Technology Disruption – If the country is a hub of technology companies, then

there is a high chance of technology disruption among various industries. Cebu Gokongwei has

to assess whether it can live with the fast pace of technology disruption in its industry.

 - Technology transfer and licensing issues for Cebu Gokongwei – laws and culture of licensing

of IPR and other digital assets should be analyzed carefully so that Cebu Gokongwei can avoid

shakedowns and IPR thefts.

 - Cost of Production and Trends – Cebu Gokongwei should assess the cost of production trends

in the economy and the level of automatization. At EMBA Pro, we believe that the sector is most

disrupted by technological innovation in manufacturing and production shortly.

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 - Preparedness for 5G Related Infrastructure – Countries worldwide are trying to prepare

themselves to install 5G infrastructure. Cebu Gokongwei should assess the local market's level to

roll out the 5G connectivity.

Environmental Factors 

            environmental factors are fast gaining traction not only among consumers but also among

regulators and policymakers. Climate change will lead to the extinction of more than 20% of

species on the planet by the turn of this century.

  Environmental Factors that Impact Cebu Pacific Air (D)

 - Recycle Policies – What are the recycling policies in prospective markets, and how Cebu

Gokongwei can adhere to those policies.

 - Environmental Standards and Regulations both at National & Local Levels – Often, the

environment policy at the national and local level can be different; This can help Cebu

Gokongwei in numerous decisions such as plant location, product development, and pricing

strategy.

 - Per Capita and National Carbon Emission – What is the per capita carbon emission of the

country, and what is the overall level of carbon emissions of the country. This will help in better

predicting the environmental policy of the country.

 - Paris Climate Agreement and Commitment of National Government under the Agreement –

What are the country's commitments under the Paris Agreement, and what is the general level of

consensus regarding the Paris Climate Agreement in the country. For example, Trump, not

standing by US commitments, created an environment of uncertainty.

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 - Environmental Regulation Impacting Absolute Cost Advantage Dynamics in the Industry.

 - Waste Management – What is the policy of waste management in the prospective market, and

how Cebu Gokongwei can adhere to the waste management requirements in that market.

 - Influence of Climate Change – How climate change will impact Cebu Gokongwei's business

model and supply chain. For example, if the supply chain is not flexible, it can lead to

bottlenecks if shipments from one part of the world are delayed because of a sudden climate

shift.

Legal Factors

            Legal factors often govern – conditions to enter the market, laws to operate in the market,

and procedures to resolve any other stakeholders' dispute. If the legal system is not robust, then

Cebu Gokongwei can face numerous challenges – from consumer petitions to shakedowns from

authorities.

 Legal Factors that Impact Cebu Pacific Air (D)

 - Transparency in Judiciary System & Processes – Transparency is essential for fair and

consistent decision making. If the process is consistent and transparent, then Cebu Gokongwei

can plan with greater conviction.

 - Independence of Judiciary and Relative Influence of Government – The judiciary

independence often reflects both the strength and credibility of the institutions in the country.

 Consumer Protection Laws – Cebu Gokongwei needs to know the consumer laws, the rate of

enforcement, the attitude of authorities towards consumer protection laws, and the role of activist

groups in the enforcement of consumer protection laws.

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 - Adherence to Common Law – Is the country following typical law uniform for all parties –

whether domestic or international. If there is arbitrariness in the judicial process, then Cebu

Gokongwei cannot be sure of the judgments.

 - Time Taken for Court Proceedings – Even if the country has the best of the laws, it does not

mean much if they cannot be enforced promptly. Cebu Gokongwei should do primary research

regarding how much time it often takes to conclude a court case in the country, given the legal

challenges Cebu Gokongwei can face.

 - Securities Law – What are the securities laws in the country, and what are the conditions to list

the company on the national or regional stock exchange.

 - Health & Safety Laws – What are the health and safety laws in the country, and what Cebu

Gokongwei needs to do to comply with them. Different countries have different attitudes towards

health and safety, so Cebu Gokongwei should conduct thorough research before entering the

market.