PESTLE Analysis

PESTLE Analysis is a simple, useful and widely-used tool that helps you understand the
“big picture” of your Political, Economic, Socio- Cultural and Technological, Legal and
Environmental aspects. As such, it is used by business leaders worldwide to build their
vision of the future.

PESTLE analysis is concerned with the environmental influences on a business.

Identifying PESTLE influences is a useful way of summarizing the external environment
in which a business operates. However, it must be followed up by consideration of how a
business should respond to these influences.

It is important for these reasons:

o First, by making effective use of PESTLE Analysis, you ensure that what you are
doing is aligned positively with the powerful forces of change that are affecting
our world. By taking advantage of change, you are much more likely to be
successful than if your activities oppose it ;
o Second, good use of PESTLE analysis helps you avoid taking action that is
doomed to failure from the outset, for reasons beyond your control; and
o Third, PESTLE is useful when you start operating in a new country or region. Use
of PESTLE helps you break free of unconscious assumptions, and helps you
quickly adapt to the realities of the new environment.

Economic Environment

1. The Indian economy has grown at 4 per cent per annum during fiscal year 2008 –
09
2. Finance availability to off road vehicle manufacturers has grown in scope during
the last few years.
3. Several Indian firms have partnered with global players. While some have formed
joint ventures with equity participation, others have entered into technology tie-
ups.
4. Establishment of India as a Manufacturing hub
5. The level of inflation Employment level per capita is right.
6. Govt. has granted concessions, such as reduced interest rates for export financing.
7. The manufacturing sector has grown at 8-10% per annum in the last few years.
8. Finance availability to CV has grown in scope during the last few years.
9. Indian Customers are highly discerning, educated and well informed. They are
price sensitive and put a lot of emphasis on value for money.
10. The International Monetary Fund has projected India’s growth rate to be about 6.3
percent in 2009. It is anticipated that the effects of the economic decline are likely
to decrease it further.
11. Inflation rate has eased and in June 2009, was less than 0.0 percent.
 12. Currently, due to higher interest rates, some industries have experienced a
reduction in demand.

Political Environment

1. Indian government auto policy aimed at promoting an integrated, phased and

conducive growth of the Indian automotive industry.
2. Allowing automatic approval for foreign equity investment up to 100 per cent,
with Current Political Environment no minimum investment criteria.
3. Formulation of an appropriate auto fuel policy to ensure availability of adequate
amount of appropriate fuel to meet emission norms.
4. Ensure a balanced transition to open trade at minimal risk to the Indian economy
and local industry.
5. Plan to have terminal life Policies for CVs along with incentives for replacement
for such vehicles.
6. The government has begun floating tenders for various projects and allows
international participation.
7. IIFCL has been given the authority, by the government, to provide about $ 5.18
billion for funding purposes, to companies associated with infrastructure
development.

Social Environment

1. Growth in urbanization, 4th largest economy by PPP index.

2. Upward migration of household income levels.
3. Increase in PPP, led to the increase in Infrastructure development.
4. Over the next few years, the energy requirement in the country is expected to
increase manifold.
5. This is to lead to an increased need for coal, thereby increasing the scope of the
equipment needed for mining and associated purposes.
6. Moreover, as the economic downturn reverses, the hiatus experienced by real
estate business is anticipated to end. Along with this, several infrastructure
projects in the country are also expected to begin.

Technological Environment

1. With the entry of global companies into the Indian market, advanced
technologies, both in product and production processes have developed.
2. The Government of India is promoting National Automotive Testing and R&D
Infrastructure Project (NATRIP) to support the growth of the auto industry in
India.
3. Technological solutions helps in integrating the supply chain, hence reduce losses
and increase profitability.
4. Customer attitudes are experiencing a major shift from being extremely cost
sensitive to being quality focused.
 5. Safety prioritizing technologies are gaining momentum. FOPS, ROPS, operator
comfort, and other safety measures, which used to be the forte of imported
vehicles once, are currently being increasingly adopted by Indian manufacturers
as well.
6. emission Norms

Legal Environment

1. Legal provision relating to environmental population by automobiles.

2. Legal provisions relating to safety measures.
3. Confirms the government’s intention on harmonizing the regulatory standards
with the rest of the world.