PESTLE ANALYSIS

INTRODUCTION
Malaysia is an important growth market for Carlsberg.PESTLE is an important tool for
assessing external macro-economic factor that the company can utilize to develop an objective
view of the always changing environment it operates in.The six elements of a PESTLE analysis
is flexible and allows the company to act and react to prevalent business condition so maximum
profit can be achieved.Strategic planning decisions will be more conducive with a clear
understanding of the external factors and the company will possess the ability to spot
opportunities or have advanced warnings of threats.

POLITICAL
The political factors are evaluated in terms of their ability to heavily affect the business
environment affecting product sales and profit. This includes changes in power, influence of key
relevant actors/groups, lobbying/ campaigning by interest groups(local or national), government
policies(national,state or provincial), social policies on alcohol consumption,trade regulations,
and tax policies Politicians in a tolerant Islamic country has be trying to reduce general alcohol
consumption to curb binge drinking and antisocial behaviours.They have set more restrictive
policies and approved increment in alcohol tax. For example the duties and excise tax levied on
beer is now RM7.40 per litre, second highest duties tax for alcoholic drinks in the world and also
has 26 different tax rates for alcoholic beverages .There is also various regulation on places that
are able to obtain licenses to sell alcohol and restrictive advertisement over broadcast media and
on billboards.This highly taxable product increase in tax translates to increase in sale price (price
sensitive competition) However ,Carlsberg has developed innovative way around this problem
by sponsoring music and charity events boosting the company visibility.

ECONOMIC.
The economic factors include awareness of inflation and interest rates, economic growth
and threats of recession, the business cycle followed in the country, expected direction of
economic change and economic trends,expected economic interventions by governments and
their consequences.The current economic situation in the country is set to favour CBMB in terms
of growth rate and expansion operations.The recovery period and increase in the disposable
earnings is positive in Malaysia.CBMB has an exceptional dispensation network in Malaysia
allowing it to capture almost 50% of the market share.The company also have experienced
employees and have financial stability protecting them from fluctuation of Malaysian market
ensuring investors confidence in CBMB.CBMB also deal with risk of exchange rate fluctuation
as they are translated into Carlsberg´s functional currency, DKK.The fluctuation can have a
considerable repercussions on the income and profit revenue.CBMB in certain cases hedge
specific cash flows such as dividends to be received in foreign currencies and fixed-price
agreements in local currencies with suppliers.

SOCIO-ECONOMIC
Socio economic factors in the elements such as customer demographics, cultural
limitations, lifestyle attitude,education level, and how the buyer needs are molded and what
brings them to the market for purchasing.Comprehension of consumer behaviour is essential to
ensuring a personal approach to deal with promoting.The northern side is completely different to
the southern side and CBMB has realized this and has shifted their strategy to target mostly
urban cities.Carlsberg has broadened its beer portfolio and market initiative to create new
drinking opportunities and target group.This to include beers with a taste of fruit and bubbles,
targeting woman drinkers ,variety of beer-drinking events during football matches and
promotions for festival seasons.The brand name of Carlsberg Green Label is extremely powerful
asset with high brand equity ,helping the company take up an advantageous position in the beer
market.CBMB promotes the beer as the international premium beer making it the preferred
choice among Malaysian consumers and tourists.

TECHNOLOGY
Technological factors include new technologies that impact the business, innovation and
alternative technologies , trends and rate of technological change, rise of social media along with
increased access to technologies.This is done to secure its competitiveness and ensuring its
production cost are kept to the minimum.CBMB realizes that consumers are eager to embrace
new technology.The company is developing an e-commerce as a platform along with increased
interaction with consumers using social media. The influence of Internet and the rise of
eCommerce market has enabled the company to remain mainstream and communicate to
different targets talking about specific topics or based on interests through social media.As per
the organization sources, it is utilizing state-of-the-art technology to guarantee that the brew has
improved quality and taste which helps to create consistency.The machines are handled by
proficient professionals who control the entire procedure with proper application.CBMB relies
heavily on information technology as they handle a worldwide business and it is important to
ensure efficiency to cope with demands of their product.They have outsourced their IT functions
to the renowned multinational computer technology and IT consulting corporation , IBM.
helping to adapt and integrate easily with their geographically dispersed markets.

ENVIRONMENT
Among the relevant environmental factors CBMB has to be concerned with is the
geographical location where it operates, changes in weather and climate, regulations or
requirements (national and international) regarding waste management, pollution and recycling
,environmental impacts of ongoing activities and use of eco-friendly products and
practises.There is increased attention directed towards corporate social responsibility and
environmental concerns from consumers including concerns over packaging/recycling (Dubois,
2012, p. 36).Politicians are known to levy extra duties and taxes on production companies that
are prone to pollute the environment.Consumers want the company to take a proactive role in
protecting and preserving the envroment.Beer production impacts the environment with the huge
measure of water it takes to mix even one barrel.Carlsberg has an inbuilt water treatment plant
for brewing process along with proper maintenance of faucets and piping and embracement of
new technology innovation to help with energy efficiency. .CBMB environmental strategy has
helped them to lower cost with less energy consumption and better management of the water
used.CBMB is working towards zero waste management and encourage the community to
recycle as well.Using a measurement scale developed by the company , CBMB regularly checks
to see how well are all the policies being implemented

LEGAL
The legal factors that CBMB has to be concerned with are existing legislation having an
impact on business, consumer protection law,copyright & patent laws,changing nature of
regulation,health and safety laws, and the standards, oversight, regulation done by regulatory
bodies.This all affects CBMB in terms of production, distribution, advertising , and content used
in beer.,It is important for a company to adhere to global regulations and changes across different
international markets (Schaffer et al, 2014, p. 12).In a Islamic country , there is also ethical
issues to deal with.The laws on beer and liquor vary state to state and have different regulations
at both federal and state level regarding alcohol consumption and sale ..CBMB has to adhere to
competition laws and the government has put restriction(acquisitions of other company) in place
to ensure one company does not have a monopoly on the industry.CBMB cannot sell in certain
states, or have a time limit in place along with a renewed law regarding the age limit which has
been changed to 21 years old .There is also no tariff reduction on the export of alcohol from
Malaysia according to International Trade and Industry Minister Datuk Mustapa Mohamed
(2010) which is one of the policy under the implementation of Asean Free Trade
Area(AFTA).The laws in place has ensured that no imitation products are produced and able to
gain market share.CBMB has also changed their accounting reporting standards to meet
international requirements (IRFS) to ensure transparency and consistency in reporting

SOCIAL
The social factors CBMB has to deal with are demographics and population trends, health
among populations, social, religious, and culture mores of the society,expected direction of
social change,changing lifestyles and consumer preferences,public perceptions (issue, initiative,
organization, etc) ,relevant customs, traditional beliefs, attitudes and reach of communication
channels among target population.In Malaysia, the major consumers are non-Muslim.The asian
population has a bigger appetite for beer compared to liquor along with rising adoption of a
Western culture coupled with higher disposable income. The sales of Carlsberg Malaysia has
increased due to the high quantity demanded of alcohol.A growing number of health conscious
people along with the national government's focus on health in the society has reduced beer
consumption due to diet and health issues.The larger effect to body fat because of the higher
percentage of calorie, therefore consumers switch to wine, malt-flavoured alcoholic drinks,(BBC
News (08-03-2005).CBMB has reacted to these changed consumer preferences by introducing
several low-calorie variants of its beers in order to appeal to healthaware consumer.There is also
concern about drunk driving , underage drinking and excessive drinking.CBMB has
implemented its CSR(in 2008) in its corporate strategy which includes five factors which are
efficiency, step change innovation, people, commercial execution and winning
behaviours.CBMB also wants its employees to have a positive impact in the communities for the
betterment of the society.