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Pest Analysis of Confectionary Industry

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PEST Analysis of Confectionary Industry

The Commonwealth of Australia has stable liberal democratic system with policies that support industrial growth (Australianpolitics.com, 2009). There is steady growth in labor market as well since 2001 (Chandra Shah, Gerard Burke, 2006). There are no additional restrictions enforced due to ecological factors on the confectionary market except for regular industry norms to take into account ecological issues. So political factor of PEST analysis is conducive to confectionary industry in Australia. Although, Australian economy is fairly sound in the past decade currently the economy is hit by global recession. Australian GDP (Gross Domestic Product) declined by 0.5% in the last quarter of 2008 (Australianpolitics.com, 2009). Inflation in Australia is currently high but set to fall from 2009 onwards(Freshplaza.com, 2009). Chocolate making industry standing at $ 2 billion in 2008 has witnessed steady and gradual growth for the last 10 years. However, the rate of growth may decrease slightly in 2009 due to economic downturn (IBISWorld, 2009). The downturn and slowing down of markets is global and Australian economy does not have any inherent weaknesses that are contributing to the slower growth rate. So Economic factor of PEST analysis also favors the confectionary market, except for the downturn caused by recession, which is expected to reverse from 2009 onwards.

The Age-Sex pyramid of Australian population shows that 35-45 age cohorts form the highest percentage of population among different age groups (NationMaster.com, 2009). Nonetheless, there is substantial percentage among other age groups as well starting the age of 5. We can safely assume that the majority of the chocolate consumption age group is 5-45 although, the peak consumption age group is between 12-24. About 20% of Australian population is estimated to be in the peak chocolate consumption age group by 2010 (NationMaster.com, 2009). Therefore, Social factor of PEST analysis is also conducive to the growth of chocolate making industry in Australia. Australia, being a developed country is on par with the best of the technologically advanced countries like the USA, UK and Japan. Lack of technological growth and availability of sophisticated equipments has never been a problem with Australia. So Technology factor of PEST analysis is quite encouraging to the growth of confectionary industry.

To summarize, political, social and technological factors are quite conductive to the growth of chocolate making industry. However, current economic downturn evokes concerns about growth in domestic consumption in the immediate future. So economic factor of PEST analysis is a cause of concern.

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