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France Pest Analysis

In: Business and Management

Submitted By kkhouette
Words 2696
Pages 11
X00107965 Capucine Houette
X00107965 Capucine Houette

Global Business

Global Business

Macro Environment of France
Macro Environment of France

Table of Content

Introduction 3

Pest Analysis 4
- Political 4
- Economic 6
- Socio Cultural 6
- Technological 8

Opportunities 9
- Political 9
- Economic 9
- Social 11
- Technology 11

Threats 12
- Political 12
- Economic 12
- Social 13
- Technology 13

Conclusion 14

Introduction

The macro environmental brought together factors that influence an enterprise situation in its market by changing its supply and demand in an exogenous way. The enterprise can’t influence them, but it has to anticipate because they are source of opportunities and threat. In this written work, the macro environmental will be discuss with the example of France. The choice of this country is du to many facts. France was one of the 6 country who created the Europe in 1957. Nowadays this organization allow many countries to develop themselves by a free trade of products and people. This country is a sort of example and as French student I am involve in France economy.

To present the macro environmental of France, an analysis of PEST will be require with an explanation of the opportunities and threats in its market.

PEST Analysis

The PEST method is use to realise an environment analysis or a survey about a country. PEST is the acronym of different domain to study : * Political * Economic * Social * Technological
Political
Government stability
France is a republic; the institutions of governance of France are defined by the Constitution, more specifically by the current constitution, being that of the Fifth Republic. The fifth republic was established in 1958, and was largely the work of General de Gaulle - its first president, and Michel Debré his prime minister. It has been amended 17 times. Though the French constitution is parliamentary, it gave relatively extensive powers to the executive (President and Ministers) compared to other western democracies.
In this government they are many parties. The main "conservative" party is the UMP - Union pour un Mouvement Populaire.This is one of the largest political parties in France. It is also as the Britain's Conservatives and America's Republicans, it is a party that encompasses a fairly broad range of political opinion, including traditional conservatives, social liberals, and also a Thatcherite or neo-conservative right.
The far right in French politics is occupied by two parties, the Front National which s a classic extreme right-wing party, similar to Britain's BNP, campaigning on a ticket of national preference, law and order, and anti-immigration. It’s now the 3rd most important party in France after UMP and Socialist party.
The main party of the left is the Socialist Party which is one of the two major contemporary political parties in France, along with the centre-right party Union for a Popular Movement. Francois Hollande went on to win the 2012 Presidential elections, and spearhead a return of the Socialists to power following victory in the ensuing federal election.
France is a part to the European Union and its money is the euro.
Considering to these factors, France is a stable develop country. There is no war, no conflicts, no political trouble. The political risk is low : it’s between 8,75 and 10.

Fiscal policy
The fiscal policy is all the legislation and regulation in a fiscal effect, relative to the administration and fiscal withdrawal. This is the fiscal policy of France : * Tax : they are many taxes about different products or services. A tax for income is attribute according to the income number. The most people get, the most tax they have to pay. This tax is the tax rates. * Secondary there is a tax call Value Added Tax attribute to different domain. One VAT is at 19,6% and is mainly for products, goods and services. The second one is a VAT at 7%, which is for agricultural products, transport, restaurant industry… The third one is at 5,5% and concern products for alimentation, products for disabled people, gas and electricity, books… And the last one is the less high which is at 2,1% for medication, news, shows… Each product or service has to refer to a tax.

Economic
The second domain of the PEST is about the economy of a country. In 2010 it was said that France was the 5th economical power in the world. This shows how the economy is well managed. To evaluate this factor, few points will be discuss : * The Gross Domestic Product show the wealth value of production for a country. Between two periods this indicate the growth rate. After a second trimester at +0,5%, the Gross Domestic Product is now at -1% in October 2013. * In correlation, the purchasing power of the population is +2% in 2013. * These last 10 years the interest rate increased by 50% and is now at 2,57% * France continues to spend more than it produces. In 2012 the deficit in its totality was really high : 98,8 Billion € * The unemployment rate is quiet high du to the crisis : 11% in 2013 * In the same way, the inflation rate of France in around 1%

Socio cultural
Obviously, the official language in France is the French with more than 65 millions of inhabitants. It has a high fertility rate by European standards, which are 2,01 children born per woman. Mean age of women having their first birth: 29.9 years old. Nowadays couple prefer to get a job and a house before to get children. It is to be sure to have strong foundation to start a new family.

According to the National Institute of Statistical and Economic Information, the birth rate is 12,6% against 8,7% for the mortally rate.

This is a pyramid of age showing the distribution of sex in France. Women have life expectancy longer than men. But there are more men in the middle of the age than women.

Even if the majority of the population is Catholic, church attendance is fairly low, however, and the proportion of the population that is not religious has grown over the past century. 27% atheists, and 65.3% Roman Catholic, while 12.7% belonged to some other religion.
There are an estimated 5 million Muslims, one million Protestants, 600,000 Buddhists, 491,000 Jews, and 150,000 Orthodox Christians.

Technical
In this dimension, many aspect will be explain to understand the France technical power : * The research and development : in 2011 the country spend more than 45 billion euros which was a rice compare to the year before. Companies tried to improve their competitiveness. * Financing of research and innovation : there are two aids. The first one is a public fund by regional, national or international organisms. The second on is a private fund deliver by sponsorship, foundation of research or by an agreement of research for project. * State expenditures for research : The government spend more than 25 billion euros for the research * Technology transfer : In France many organisation act for the technological transfer as the SATT. * Obsolescence rate : Product are quickly obsolete du to all the new technological product in markets.

The PEST shown and develop hereabove will be helpful to enumerate and details which are the opportunities and the threats for France.

Opportunities for the country of France
Political
Democratic principles firmly in place Since the fifth Republic who started in 1958, principles that were developed are now firmly fix in the society.. To citizens, elections are considered as fair and transparent giving the choice to everyone to express itself. According to many organizations, France is a country where the population select their government, get their freedom of expression, select their media, can be inform and express them.
Strong anti-terrorism stand
Anti-terrorisms is in most of the countries. In this case, France strategy to fight against it is recognized one of the most effective in Europe. To have a good strategy, the country has to perform in each domain and especially in a way to get right and effectiveness information. France has gone to great lengths to prevent terrorist acts in the country especially after all the terrorism attack that append everywhere whit the most traumatic that happened in the United States.

Economic
Starting a business
The economy was well ranked by the World Bank, which gave the 27th rank to 185 countries. To start a business, a company need only seven days, which is less than the average of 12 days. Moreover, the cost to start a business is only 0.9%, which is again less than the average, which is 4.5%. In addition, there is no paid- in minimum capital to start a business in France; whereas, it is 13.3% .

Well developed infrastructure
Infrastructure is an important fact that a country can’t leave out. France understood the necessity of this challenge to be sure to have a good business. This is why it processes one of the best infrastructures in Europe : more than 11,000km of well-maintained highways and around 1 million km of roads. This brings France infrastructure has the biggest network in Europe. The railway network is considered as the most integrated and well organized in Europe. It provides a good quality service. The network is across 32,000km, with nearly 2,000km of high-speed lines.
The landed infrastructure for a country is important : it is in correlation with business. Another area is also important : the air transport. Around its towns, France has global air transport with around 500 airports, including 45 domestic airports and 10 international airports. The two famous and most important airports in the country are Charles de Gaulle and Orly. They both set up in Paris, the capital, and can handle more than 75 million passengers annually.
After occupying ground and sky areas, a country has to be present in sea. Five of the main seaports in Europe are situated in France. This include Marseille on the south, the largest French and third largest European port, Le Havre on the north, the fifth largest European port, Dunkirk, Rouen, and Saint-Nazaire.
The country also has a highly developed telecommunications system, with extensive cable and satellite systems. In 2012 France was ranked in the 12th position in the Logistics Performance Index. It offers to international investors excellent conditions of doing business.

Social
Low inequality
Nowadays, one of the sensitive subject is about equality between people about sex, income and nationality. In this case, France has one of the lowest inequality rates. A survey shows that between different parts of the population, the inequality is low. Moreover, since 2010, the gap between the average incomes of the richest and the poorest of the population was the lowest.
High fertility rates
As seen previously, France has one of the highest birth rates in Europe, due to various government measures, the country registered a fertility rate over 2.01 children per woman in 2010, which is higher than the European Union average which is over 1.57 in the same year. This show that the population is young and that generation replace one another quickly.

Technology
Large number of patents received
According to the PEST analysis developed previously, France has a good strategy about Research and Development. This brings it to the fifth ranks in the world in terms of number of patents for innovations. From 2012, France has received a total of 134,641 patents indicates that the country has well done to favour innovation and R&D.
Expenditure on Research and Development
France‘s expenditure in Research & Development is one of the highest within the euro area. In 2011, France‘s Research & Development spending was around 2.25% of GDP in 2011. Compare with other developed countries in the euro area France is in a right position.

Threats
Political
Political row over immigration

One of the problem for North countries, called rich countries, is to managing with immigration. It is on of the major challenge as the country continues to fight against a large influx of immigrants (legal and illegal). Because of the crisis that touch each countries, the president Hollande try to limit the influx of non European Union migration. The focus on immigration is due to the number of unemployment rate who put pressure on education, housing and work

Concentration of power in less hand
The important French business establishments have formed a small and very closely knit group which influences the government policies. The concentration of power within a small group gives a way to corruption. In France, the president and the prime minister are the two most important persons who share the power. However the government has passed legislation to decentralize power and fiscal and administrative powers to local elected officials.

Economic
Weak government finances
According to the PEST analysis, the deficit is high. The organisation, IMF, had shown that the budget deficit was 4.8% in 2012. This number is well above the 3.0% limit imposed by the Maastricht Treaty. Moreover, in the same year, the government missed its deficit target, which should be 4.5% of GDP. The dept percentage increase each year : in 2011 it was 95,8% of GDP and 90.2% in 2012 above the EU limit at 60.0%. The public debt is constantly increased and has reached alarming levels.

As said previously, France‘s public spending is one of the highest. This way to save a large welfare state is one of the major cause of the increasing debt and to the high deficit. A welfare state can be maintained when the economy is increasing and receiving enough tax result to fund welfare schemes. With a stagnating economy, revenue can’t improve due to lower tax receipts.
The government should start pursue economic and social reforms in order keep its credibility in the international financial market.

Social
Disillusioned youth
Unemployment for people aged of 15 to 24 has not lower below 16% in the last three decades. From 2010, one to every six persons between the age of 15 to 29 were not employed or in the education. In 2012, youth unemployment was one of the higher. Since 2000, the relative poverty rate rose from 16% to 18% for people aged of 15 to 29. According to these facts, the French youth are pessimistic about their future.

Technology
Multiplicity of authority who lead to lack of co-ordination
The French Research & Development and innovation space has a large number of research and knowledge institutes with overlapping objectives. Government organisms as the Ministry of Higher Education and Research, the Ministry of Industry, and the Ministry of Defence have to work in duo to come out with a unified policy. However, the general objectives of these organisms are very different, making implementation difficult.
These last years, France try to more interact with the European Union through the NATO. This is an opportunities to company to develop themselves not only in one country which is France but with a group of countries. The importation and exportation are easier and faster with the free trade of products and services.
Conclusion

As seen previously in details with the PEST analysis, the opportunities and the threats, France is one of the most important country for the European Union. Its government and economy are one of the best and secure. They give the opportunity to companies to develop themselves in good condition and give them the most tools as possible to succeed. France is a competitive country in many domains as services, technology, tourism ect… All of theses are opportunities to foreign country to start a new business. However, this country has to deals with threats that’s are barriers for investors as the tax system. Moreover, because of the crisis that touches everyone, France is less popular for doing business.

References

Websites
About France : http://about-france.com/geo/french-economy.htm
France inflation : http://france-inflation.com/index.php
Insee : http://www.insee.fr/fr/themes/info-rapide.asp?id=26

Education Gouv : http://www.education.gouv.fr

Inegalites : http://www.inegalites.fr/

Vie Publique : http://www.vie-publique.fr/

Impots Gouv : http://www.impots.gouv.fr/

Economie Gouv : http://www.economie.gouv.fr

Courses

Global Business courses

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