pestel analysis

Topics: Economics, Decision making, Inflation Pages: 2 (674 words) Published: October 28, 2014

EXTERNAL ENVIRONMENT ANALYSIS: - In the overall growth of the company external environment plays very crucial role. In this external environment there are several forces which affects company’s decision making policies very deeply and political, economic, social, technological, environmental and legal are those main forces (according to the pestel model). So we will analyse how these forces affects working and decision making of Maruti Suzuki. POLITICAL FACTORS: -

As Maruti Suzuki is an automobile company various govt. policies regarding export duties, taxes, labour laws, tariffs affects company’s decisions drastically. The govt. of India’s certain decisions to reduce the export duties, 100% tax deduction in export profits enables Maruti Suzuki to increase its business as well as profits. These decisions have positive impact on the overall automobile industry. But the decisions like ‘to deregulate diesel prices’ affects companies expansion policies negatively as there is decline in the demand of diesel cars and as result of which company shelved the expansion of Manesar engine manufacturing plant. Also political uncertainty or uniformity in govt. policies negatively affects growth of the company as in year 2013 and 1st quarter of 2014. So while making decisions and future plans for company present political condition plays very important role. ECONOMIC FACTORS:-

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. Because of the slow economic growth the sales of the company also decline in Q3 of 2013-14 by 3% over the same period last fiscal. Also exports drops by 38.6 % over the same period last fiscal. in reverse in Q1 of 2014-15 company’s sales and exports increased by 10.8 % and 38.7 % over the previous year respectively. It is because of recovery stage in the economy. Also other factors like interest rates, inflation rate affects business of the company. Maruti Suzuki expects reduction in interest rates so...
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