Mittal School of Business
LOVELY PROFESSIONAL UNIVERSITY
ANNEXURE:1
Course Code: MGNM578 Course Title: International Business
Environment-1
Course Instructor: Rajeev Gupta Section: Q2242
Academic Task No. 2 Academic Task Title: PESTAL ANALYSIS
Student’s Roll No. Student’s Reg. No.
Max. Marks: 30 Marks Obtained:
Evaluation Parameters: As per rubrics
Learning Outcome: The PESTEL analysis method
Declaration:
I declare that this CA is my work. I have not copied it from any other student’s work or any other source
except where due acknowledgment is made explicitly in the text, nor has any part been written for me
by any other person.
Student’s Signature:
Evaluator’s Comments (For Instructor’s use only)
General Observations Suggestions for Improvement The best part of the
Assignment
Evaluator’s Signature and Date:
PEER RATING FORMAT
Registration Section Class Roll Name of PEER Work done by the
Number No. Student Rating person
12204130 Q2242 Q2242A08 Priyanka 8 Economic Factors
Topno
12204143 Q2242 Q2242A09 Suman Sahoo 8 Legal Factors
12204144 Q2242 Q2242A10 Suman 10 Social factors
Kumari Patel
12204150 Q2242 Q2242A11 Shruti 10 Environmental Factor,
Bhardwaj Conclusion
12204163 Q2242 Q2242A12 Samrubesh R 10 Political factor
K
12204164 Q2242 Q2242A13 Pragadeesh R 10 Overview,
Executive summary,
Technological factor,
Conclusion
FRANCE
OVERVIEW
France a western European nation is a part of the European Union. Paris is the capital of France,
and it shares border with Netherland, Spain, Andorra, Italy, Monaco, Switzerland, Germany,
Luxembourg, and Belgium in Europe and Brazil and Surinam in South America. The total
population of the country is 67.41 million people. France accounts for 3.3% of global GDP,
making it the world's seventh-largest economy by nominal GDP in 2022 and the tenth-largest
economy by PPP. [$3.4 trillion (nominal; 2022 est.) $4.0 trillion (PPP; 2022 est.)] Nice, Lille,
Bordeaux, Toulouse, Marseille, and Lyon are some of her main urban areas. With exports
accounting for more than one-fifth of GDP, France, a major trading nation, has developed into
one of the world's top exporters. Machinery, chemicals and chemical products, tropical
agricultural products, and conventional industrial goods like clothing and textiles are some of
the items that France imports in large quantities. For a significant portion of the time between
the early 1970s and the early 1990s, a trade imbalance was caused by the high level of imports.
But starting in 1992, France had a trade surplus together with a positive balance from invisible
(non-merchandise) transactions, particularly in the travel sector. In 2020 France was the
number 7 economy in the world in terms of GDP (current US$), the number 8 in total exports,
the number 7 in total imports, the number 27 economy in terms of GDP per capita (current
US$) and the number 15 most complex economy according to the Economic Complexity Index
(ECI). In this case study we will be using PESTEL method to analyse and recommend the
whether the country should focus on importing or exporting from other countries, to have
balance of trade.
In PESTEL analysis we will be analysing six factors. The term PESTEL refers to
• Political
• Economic
• Sociocultural or Social
• Technological
• Environmental
• Legal
EXECUTIVE SUMMARY
In Fourth Quarter 2021, France exported €131B and imported €166B, resulting in a negative
trade balance of €34.5B. Between Fourth Quarter 2020 and Fourth Quarter 2021 the exports of
France have increased by €15B (12.9%) from €116B to €131B, while imports increased by
€32.8B (24.6%) from €133B to €166B.
1. The top exports of France are,
• Packaged Medicaments ($27.9B),
• Planes, Helicopters, and/or Spacecraft ($25.2B),
• Cars ($18.9B),
• Motor vehicles; parts and accessories (8701 to 8705) ($12.4B),
• Gas Turbines ($11.5B),
The top exports are to:
2. The top imports of France are,
• Cars ($35.5B),
• Packaged Medicaments ($18.5B),
• Refined Petroleum ($14.7B),
• Motor vehicles; parts and accessories (8701 to 8705) ($12.7B), and
• Crude Petroleum ($10.5B),
The top imports are to:
In 2020, France was the world's biggest importer of Non-fillet Fresh Fish ($2.02B), Glands and
Other Organs ($923M), Nuclear Reactors ($603M), Other Metal Fasteners ($299M), and
Agglomerated Cork ($175M). In Fourth Quarter 2021, France exported mostly to Germany
(€18.3B), Italy (€10.8B), Belgium (€10.3B), Spain (€10.2B), and United States (€9.3B), and
imported mostly from Germany (€21.9B), China (€18.7B), Belgium (€14.1B), Italy (€12.2B),
and Spain (€11.3B).
Currently France is facing trade deficit. France’s trade gap widened to €14.54 billion in July of
2022 from an upwardly revised €13.08 billion in June, topping market estimates of a €13.56
billion shortfall. It was the largest trade deficit since available records began in January of
1997. Imports rose by 0.5% over a month to a new all-time high of €63.28 billion, exports fell
by 2.3% to €48.74 billion
In this case study we will be discussing about the PESTEL analysis of the country and where
the country should invest and focus more (product side / service side) for the better growth and
to maintain balance of trade in the global market.
POLTICAL FACTORS
French President Emmanuel Macron pushed for an open Europe in a speech at the Sorbonne
University on September 26, 2017, in order to safeguard and promote business interests while
ensuring our rights and cooperation with trade regulations.
The government therefore supports a balanced trade strategy that guarantees French companies'
access to international markets while upholding societal sensibilities and preferences. France
is also working with the Council to improve its trade defence and to defend its critical sectors
by boosting its anti-dumping charges and improving its oversight of foreign investment in order
to provide the conditions for fair competition and reciprocity in the opening of markets.
The government also announced new commitments with the action plan of October 25, 2017,
regarding the EU-Canada Comprehensive Trade Agreement (CETA), to better address
environmental issues, increase negotiation transparency, and strengthen protection of sensitive
sectors.
Political Stability
Political instability is characterised as a propensity for regime or government change, societal
political discontent or violence, or instability and uncertainty in government policy, such as in
laws governing regulations, taxation, property rights, or human rights. Political turmoil can
have a negative effect on supply chains and operational procedures, endangering productivity,
quality, and crucial connections. Unfortunately, if a corporation has a lengthy supply chain,
political volatility is difficult to prevent. In a survey conducted by the American Productivity
and Quality Centre (APOQ), 63% of the businesses stated that they had suppliers in nations
where political turmoil was common.
For example, Deutsche Post halted parcel deliveries in Ukraine because of the continuing
unrest there – even though 620 German companies operate in Ukraine. And it is not just supply
chains that are affected by political instability. The Swiss logistics company Astras reports a
staff turnover rate of 20% among its employees in Ukraine.
Trade policy
The World Trade Organization (WTO) reports that WTO countries are continuing to
implement more trade restrictions. Companies may find it challenging to negotiate the vast
quantity of political trade measures, but with an average of 22 new measures being introduced
every month, it is crucial to be aware of the political plans of governments. The fact that several
current trade agreements are also at danger heightens uncertainty for businesses. Regressive
trade restrictions could result from the Trump administration's "America First" agenda, which
includes actions like withdrawing from the Trans-Pacific Partnership (TPP) and renegotiating
the North American Free Trade Agreement (NAFTA).
Import Regulation
Conformity to European standards and "CE" marking: Products governed by these regulations
must adhere to certain European standards at the point when they are imported. The "CE" sign
of compliance must be on the product, either when the product is imported or when it is sold.
Since the list of products is growing, the following is merely indicative:
• active implantable medical devices
• appliances burning gaseous fuels
• cableway installations designed to carry persons
• construction products
• eco-design of energy related products
• electromagnetic compatibility (all electrical appliances)
• equipment and protective systems intended for use potentially explosive atmospheres
• explosives for civil uses
• hot-water boilers
• in vitro diagnostic medical devices
• lifts
• low voltage devices
• machinery (including agriculture machinery, tractors)
• measuring Instruments
• medical devices
• noise emission in the environment
• non-automatic weighing instruments
• personal protective equipment
• pressure equipment
• pyrotechnics
• radio and telecommunications terminal equipment
• recreational craft
• restriction of hazardous substances in electrical and electronic equipment
• safety of toys
• simple pressure vessels
• wood packing materials
ENVIRONMENTAL FACTORS
While France does have several booming urban areas, the country is mostly supported by
environmentally friendly aspects and known for its agricultural industry and products. As the
European Union leader in food exports, France has been blessed with fertile plains that span
across two-thirds of its area, thereby allowing the country to cultivate more than 50% of its
land.
France is also home to numerous forests that cover approximately one-third of the country, as
well as various mountain ranges in the south. While climate in the north is typically humid and
cool, southern France typically has a warmer and drier climate. In particular, the increased heat
that exists in the southern part of France is advantageous for growing grapes and subsequently
supports the production of the world-famous French wine by making France the world's largest
winemaker.
In regard to telecommunications, biotechnology and aerospace advancements, France also
excels in promoting the development of these technologies. Coal and steel industries are
focused in the northeast part of France near large coal fields.
France has undergone a period of deindustrialization and increasing affluence that has resulted
in an outsourcing of manufacturing. Similarly, an increase in both housing and infrastructure
projects of France have been built to accommodate the country’s growing urban and coastal
areas.
THE CITY OF STRATSBURG DURING WINTERS
ENVIORNMENTAL POLICIES OF FRANCE
France is trying to change resource usage and production habits to ultimately reduce
environmental concerns. Many national and territorial action plans are being carried out by the
French government in an effort to reduce emissions of pollution into water.
French policies have also started supporting the growth and development of environmentally
friendly businesses, of which includes the country’s support for both the research and
development of clean technology. The proportion of environmental training is also contributing
to a fast integration of ecological issues into the economy.
ENVIRONMENTAL FACTORS AFFECTING FRANCE
TOURISM INDUSTRY
Millions of tourists visit France annually and the French tourism industry adds billions of
dollars into the country’s revenue. Some of her beautiful places are Brittany, Chamonix Mont
Blanc, Palace of Versailles, Louvre Museum, and Eiffel Tower.
ENVIRONMENTAL CHALLENGES
France has achieved economic growth and progress at the cost of environmental challenges
that many tourists and residents have experienced. Some of those issues are erosion of
biodiversity, noise pollution, household waste, natural disaster, water pollution, and air
pollution.
FRANCE ENVIORNMENT may suffer from water pollution sooner than in other countries.
The country has faced water contamination caused by acid rain. Not only did it impact water
quality, but it also destroyed forests too.
One-third of the land is forest, which means the country focuses on protecting the land and the
species. Unfortunately, the flora is most at risk. Luckily, the government makes the forestry a
prime focus and have created designated nitrate zones, allowing for increased agricultural
developments.
Unfortunately, France is also one of the most notorious locations for industrial carbon dioxide.
This is something the country has to focus more on, as the millions of metric tons of carbon
dioxide seeping from the country affect the world’s environment as a whole.
While France is still coping with the legacy of its industrial past, pressures of its massive
agricultural sector and high resource demand, it appears the country is aggressively pursuing a
cleaner future in both the public and private sectors. Over the next few years, France is expected
to take the following steps to continue their dedication towards improving the environment:
-Increase taxation on high emission vehicles to improve air pollution
-Provide a sustainable form of financing both water infrastructure programs and waste water
services
-Continue to support the R&D and dissemination of clean technologies
-Promote agroecology by increasing the training, researching, and financing programs
SOCIAL FACTORS:
THE SOCIO-CULTURAL ENVIRONMENT ANALYSIS OF FRANCE
It is not possible to analyse the cultural environment without looking at the political
environment of the country. France has one of the richest socio-cultural environments in the
world. Kurtz (39) states that France has a very rich cultural heritage that makes it stand out
among many other countries. The socio-cultural environment of this country is diverse.
Because the peoples in France from thoroughly the world in this country.
There are countries that cherish equality and women have equal economic power as men. In
such countries, firms do not segment the market by gender, but by age. France is one such
country. The country is known for its ideals and declaration of human rights. This peculiar
socio-cultural belief of the French was also seen during the colonial period. They adopted
assimilation as their policy.
In this policy, the French government and society in general accepted colonized people who
converted themselves into French citizens to become French citizens with the same rights as
other French citizens. It is one of the few Western countries where discrimination on the basis
of race was minimal even when powerful states like the United States discriminated against
some of its citizens.
On the basis of religion, this country has several believers who belong to different religions.
The main religion is Christianity. But other religions include Muslim, Jewish, Hindu and pagan.
All these religions have been coexisting peacefully and without any friction.
Though, EVERY Community has its own trust that make them unique in the market. For
example, Muslims do not eat pork. Although their population is not very large in this country,
they have influence in the market. So a business unit must be careful while segmenting the
market.
Consequent to Hardwick (112), there is an identical role that makes the French market different
from others. The French generally prefer leisure. They like attractive products that symbolize
love for life and for others. That is why it is one of the main markets for flowers. The country
is also the most sensitive about colour. They have cultural beliefs about certain colours.
Each colour has a specific association and is therefore suitable for different occasions. A firm
must make a deep consideration when choosing colours for its products. This society is also
very cautious about speech. Each word has a special meaning. As a marketer, one needs to be
very careful in choosing the words used during promotional campaigns. Any wrong use of
words can cost a firm its market share.
The technological environment of this country is very dynamic. Technology innovation and
innovation, especially in communication, are at the same time major challenges and strengths
of various organizations.
While these companies are left with the nightmare of trying to predict what their competitors
are going to bring to the market overnight, some have emerged as market leaders using this
technology. Technological changes are so unpredictable and organizations struggle to adapt to
these changes The dynamics of technology in this sector have pushed some firms out of the
market.
SOCIAL FACTORS AFFECTING FRANCE
MODERNISM
France is one of the most modern countries in the world. It has a total population of 63.3
million. The life expectance for men is 78 years and 85 years for women (BBC, 2021). France
is famous for its cuisine, fashion, perfume, cars, culture and language. No wonder why France
is the most visited tourist destination. It is also interesting to note that French is the second
most widely learned foreign language in the world.
SOCIAL ISSUES
The birth rate was particularly affected by the practice of French peasants who deliberately
limited their families in order to reduce the effect of a Napoleonic law that required the splitting
of the family holdings among all heirs.
While many French citizens enjoy high living standards, France is not without social
challenges. The unemployment rate is high and industrial strikes, demonstrations, and labour
unrest are common in France. Likewise, anti- immigration sentiment is rife with some spheres
of the French society.
France’s citizens of immigrant origin, immigrants and their communities are experiencing
levels of alienation, poverty and unemployment that cause the fight against domestic Islamist
terrorism to be much more difficult. France, long dedicated to secularism and equality is having
to balance what constitutes appeasement of fundamentalist Islamic demands against taking a
resolute stand against the encroachment of religion into public life and the international fight
against Islamist terrorism. The French value their freedom passionately and must decide where
public safety takes priority over issues of privacy and the limits of law enforcement.
TRENDS
French people are very cautious about their health and riding a bicycle is their preferred mode
of transportation. The majority of the old school people still love to smoke, and the others are
converting to electronic cigarettes. Many people buy fitness equipment to get themselves in
better shape.
Food Culture
French food culture also embodied the rule for lunch breaks in a law that was recently changed
due to Covid. On Monday, February 15th, 2020, a law came into force allowing employees in
France to eat lunch or dinner at their desks which was previously forbidden under the Code du
Travail (labour code). The French believe that taking a meal should be done in the company
of others to relax and enjoy the meal. That applies to workmates, families and any kind of
foodie event. Usually, a French meal will take at least 2 hours and is pretty much always
accompanied by wine or cider depending on which part of the country you are in.
TECHNOLOGICAL FACTORS
When we talk about the technological environment, France is one of the countries to dominate
the world with its modern technology. France is the leader in nuclear technology. The country
puts a ton of resources into the research and development of products. Back in 1995, 25 percent
of the GDP went to research. Three years later, the high-tech exports had an evaluation of over
$54 billion. France has a strong history in space technology, IT, and many other fields of
sciences. It has launched its first satellite in space over 50 years ago and it made the 3rd nation
to have its satellite after the US and Russia. The usage rate of the Internet is stunning in France,
France is the world’s highest user of the internet. The French rely heavily on the internet. A
high-speed connection called ADSL is most provided by companies. And if you don’t want
that, you can pop into any internet cafe found among the public streets of France. Although, as
of 2016, it’d cost you anywhere from one to five euros and up to use the internet on an hourly
basis. Paris has some of the world’s leading start-up companies and venture capitals. However,
competing with London to draw the attention of start-ups, venture capitalists and some of
Silicon Valley’s biggest names is a big and on-going challenge for Paris. Likewise, shortage
of computer engineers is also challenge.
GROWTH & FUTURE POLICY:
France has high technological growth and it’s on its way to become the tech giant. France is
ranked as the second nation in technological growth in Europe. France has invested and
planning to invest more in the tech space. The amount will exceed 5 billion euros this year,
thus putting France ahead of Germany in the tech start-ups collected from investors has nearly
tripled in the last four years. The amount will exceed investment race. The government is
actively pushing The French Tech Mission forward with the aim to become a tech giant in
Europe and later a global scale. The French Mission, also known as La French Tech, is an
initiative that promotes French start-ups on a global level and helps them develop into large
companies. The French Tech Mission will choose the top 40 French start-ups and label them
as Next40. These start-ups will have access to a fast-track administrative system and all the
support they need for further development. Funding in French tech has already crossed the
symbolic €10 billion mark and France now has more than 20 unicorns. It is an ecosystem that
is benefitting from the acceleration of digitalisation in entire sectors of the economy, such as
the digital education sector, which has gained 5 to 10 years in terms of new uses due to the
pandemic. Back in October 2021, French President Emmanuel Macron presented the €30
billion “France 2030” recovery plan, which will shape the French economic landscape in the
post-Covid world. As part of this, nearly €15 billion will be invested to enable start-ups to
spearhead innovation and the reindustrialisation of France. €5 billion will most likely go to
DeepTech start-ups while €1 billion will be invested in training in digital jobs.
However, the study noted that the proportion of revenue generated abroad dipped slightly this
year, to 31 per cent compared to 36 per cent last year. But the future mission and vision for the
technological growth and start-ups can make a huge impact in the export services of the country
to maintain balance of trade.
ECONOMICAL FACTORS
Economical factors mainly include economic growth, percentage of unemployment,
inflation, interest and exchange rates and commodity price (steel, gold, oil). It is the external
factor which effects or influence the buying capacity or the flow of currency in the country.
France is the world’s seventh largest economy by 2022. There many factors affecting:
• INDUSTRY
• HIGH GDP
• TRADE PARTNER
• HIGH TAXES
France was predicted that it could go to bankruptcy during the global recession like Europe.
But it did not happened because of the strong government invention of the financial and
banking sector by this invention the French economy did not go very low. The French economy
is also suffering through the heavy tax as they have four different types of the tax in the nation
are the general rate of goods and services, transportation, medical prescription, and renovation
work etc. The French economy has contracted by 0.2% in the first quarter of 2013. And it
suffered two recession in the span of four years.
The direct tax payment is made to the state expense in the developing projects. France having
the high unemployment rate which is making the tax high. Previously it used to be under 28%
for men and under 24% for women who were 25 year old or younger. At minimum wages those
who work the get 18,000 euros per year.
The business community suffer more than any other because the tax rate is roughly around
40% . Since the heavy taxes make difficult to employ their home country. Many company feels
the pressure to hire from outside. It’s the only the way to maintain some semblance of
competition against foreign businesses.
The French maintain strong markets in the agricultural, manufacturing machinery, and
electronics industries. The country also has many supermarkets sprinkled worldwide as well.
The problems with the economy seem to affect the middle to lower class who face problems
with taxation and governmental influence.
According to the estimation the normal GDP (gross domestic product) of France in 2020 was
2,551 trillion US dollar and its 7th world’s highest. Out of which the per-capita income was
39245 dollars and its 20th world’s highest. The drop down of the annual GDP and per-capita
income was due to the economic lockdown and pandemic of COVID-19.
France is one of the nation with extremely high tax rates. But due to covid-19 the government
has lowered the business tax rate to 25%, 27.5% and 26.5% and the government has also
lowered the income tax rate from 14% to 11%. It’s worth mentioning it here that the French
government charges different tax rates on personal income and corporations depending upon
their earnings.
LEGAL FACTORS:
According to Campbell (96), no firm can operate in an industry where there are no clear laws
and regulations to aid general governance. Laws and regulations are always enacted to help
define the relationship between a firm and the government, a firm and the public, and a firm
and other firms.
The Act should be clear on various operational matters to ensure that the operation of one firm
does not affect another firm. Some governments always enact laws that may discourage the
growth of one industry, while hindering the growth of another. Other laws BESIDES be
PERFORMED to deter foreign firms from investing in the country. The French government
enacted laws that liberalized the economy.
The laws encouraged private sector growth through public-private partnerships. Legally, most
companies have not faced major challenges. The laws governing trade in France are very
favourable to most companies. However, some companies have faced serious lawsuits for
failing to follow certain industry rules and regulations. It is important to note that this country
is primarily a Christian state.
Most of the laws in this country are based on the morals and beliefs of the Christian religion.
For this reason, there are certain business practices that are not allowed in this country. Failure
to follow industry and national laws and regulations may not only result in severe fines imposed
on the firm by the government, but may even result in the firm being shut down altogether.
The government has clearly defined how the organizations will relate to each other. Things like
advertising are closely regulated, with various agencies closely monitoring the content of ads.
This is mainly due to two main reasons. The first reason is to ensure that Company A's
advertising does not have a direct negative impact on Company B's products. It is about
creating a healthy competitive environment where companies respect each other. Another
reason for this restriction is the age of the advertising audience who are younger.
A standard language should be used during advertising to ensure that children's minds are not
polluted with content meant for adults. The law is also strict on advertising of alcohol and
cigarettes. Advertisements for products such as cigarettes must be accompanied by warnings
to users about their health. The country has outlawed the trade of hard drugs like cocaine,
heroin, among other hard drugs.
There are few environmental anxiety that have legal implications. France is a developed
country in Europe. There are environmental organizations that have come forward strongly to
protect nature. Companies operating in this country must be aware of the laws that are enacted
to protect the environment. Violation of this law may result in prosecution of the firm. This can
have serious financial consequences.
CONCLUSION
With the in depth study of PESTEL analysis of France, Frances is undoubted the key player in
the global market, but after analysing the political, environmental, social, technological,
economical, legal factors, we recommend the country to choose the technological factor to
maintain the balance of the trade, because currently France is facing trade deficit only with the
help of service exports it can maintain its balance in trade. And the reason the country is looking
forward to invest more in the start-ups and technological companies is also same, to increase
the export services and for the GDP rate of the country. Therefore by analysing all the factors
we conclude that country should increase the skilled engineers and invest more in the
technology side of the country.
REFERENCES:
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Social:
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Technology:
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sD6AhUfcGwGHQLgDb4Q4dUDCA4&uact=5&oq=what+is+economical+factor+in+pe
stal&gs_lcp=Cgdnd3Mtd2l6EAMyBAgAEA0yBQgAEIYDMgUIABCGAzIFCAAQhg
MyBQgAEIYDOgoIABBHENYEELADOgYIABAeEBY6CAgAEB4QDxANSgQIQRg
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