Raj Kumar

Thinking about airlines, the first thought which probably comes to mind would be
luxury and comfort. However, there is much more to the airline industry than just
that. Yes, most of the airlines worldwide are facing a cycle of rising operating costs
and declining profits and margins. Now, passengers may not be able to observe
these characteristics, but after extensive research it is quite apparent the global
airline industry is in disarray.
Political
The airline industry operates in a highly regulated political environment where
passengers are favored over the airlines. This is due to the fact that passenger
safety is paramount and the political establishment have been made weary of the
airlines and resorted towards strict regulations for their operations, due to their
earlier inclinations towards monopolistic behavior. Furthermore, with there being
more competition in the industry and regulations in demand, passengers are in a
position where they can push for lower prices and amenities.
Economic
The 9/11 attacks left a major impact that the airline industry is yet to recover from.
The prolonged recession, fluctuations in oil prices and an imminent global slowdown
are other debilitating factors that are affecting the growth of the airline industry.
Airlines have to cope with declining passengers, high fuel prices, competition from
low-cost airliners, labor demands and soaring operating and maintenance costs. In
addition, events such as the recent Malaysian airline disappearance, is also
adversely affecting the global airline industry.
Social
Over the years, the millennial generations emergence into the consumer class has
resulted in major social changes, more importantly in terms of service, where
consumers have become much more demanding. Therefore, to meet the increasing
demands of this segment, airlines have to stabilize their costs. Additionally, the
passenger profile has changed as well with there being more economically minded
passengers. When it comes to business class passengers, improved communication
facilities have reduced the need to fly down for meetings.
Technological
With intense competition in the airline industry, latest technology must be adapted
by airliners in order to survive in the already tough environment. Additionally, the
use of latest technology in aircrafts would not only lower fuel consumption, but also
the cost of airline operations and improve efficiency.
Conclusion
So, this PEST analysis for airline industry has highlighted four important
factors that are affecting its external macro environment. By keeping these factors
in mind, we have come to the conclusion that the increased costs of doing business,
strict rules and regulations imposed by regulators, competition from low-cost
airliners, changes in passenger profile, in addition to the recent airline related
deaths, all have affected the viability and profitability of the global airline industry
badly. It will require a lot of patience and hard work for the industry to find its way
back to the right track.
PEST OF PHARMA INDUSTRY
t never ceases to amaze me why so many businesses fail to take the time to look at the macro
and the micro environments when completing their business plans and strategies. These

external forces will play a big part in shaping the final outcome of the ultimate corporate
achievement. Yet, most managers focus only on internal factors and it is fair to say that sales
growth and profits remain high on their agenda.
The macro environment tends to have a long term impact and requires extensive research.
Couple this with the fact that many managers are over worked and under resourced and we
begin to see why the process is often not completed. There is no published evidence to confirm
this hypothesis, just anecdotal hearsay.
The remainder of this article will illustrate an example of a Macro or PESTLE analysis for the
pharmaceutical industry. It is set at a very general level but it can be used as a template or
adapted to be more specific if required:
Political
There is now growing political focus and pressure on healthcare authorities across the world.
This means that governments will be looking for savings across the board. Some of the
questions the industry should ask are:

What pressures will be put on pricing?

What services will be cut?

Will the same selection of drugs be available to everyone?

In addition to this, could there be more harmonization of healthcare systems across Europe or
the USA? What impact will reforms have on insurance models?
Economic
The global economic crisis still exists yet government reports still show that the spend on
healthcare per capital continues to grow. Will the current healthcare models exist tomorrow?
The growth in homecare (as seen in the Nutrition sector) demonstrates how nursing services
have moved to the private sector and have become a key business offering.
The reduction in consumer disposable income will have an impact on those countries using
health insurance models particularly where part payment is required.
These economic pressures are seeing an increased growth in strategic buying groups who are
forcing down prices.
Increased pressure from shareholders has caused a consolidation of the industry: more
mergers and acquisitions will take place over the coming years.
Social / Culture
The increasing aging population offers a range of opportunities and threats to the
pharmaceutical industry. The trick will be to capitalise on the opportunities.
There is also the problem of the increasing obesity amongst the population and its associated
health risks.
Patients and home carers are becoming more informed. Their expectations have changed and
they have become more demanding. Public activism has also increased through the harnessing
of new social networking technologies. How can pharmaceutical companies get closer to
consumers without over stepping the regulatory boundaries?
Technological
Technological advancements will create new business prospects both in terms of new therapy
systems and service provisions. The online opportunities will see the growth in:

New info and Communications technologies.

Social Media for Healthcare.

Customized Treatments.

Direct to Patient Advertising.

Direct to patient communications.

Legislation

The pharmaceutical industry has many regulatory and legislative restrictions. There is also a
growing culture of litigation in many countries. The evolution of the internet is also stretching the
legislative boundaries with patients demanding more rights in their healthcare programmes.
Environmental
There is a growing environmental agenda and the key stake holders are now becoming more
aware of the need for businesses to be more proactive in this field. Pharma companies need to
see how their business and marketing plans link in with the environmental issues. There is also
an opportunity to incorporate it within their Corporate Social Responsibility programmes.
Marketing and new product development should identify eco opportunities to promote as well.
The information above illustrates just a fraction of the likely macro factors involved in the
pharmaceutical industry. A better way to summarise it would be in a table:

Hotel Industry example

Hilton Hotels is a part of Hilton Worldwide that comprises 10 brands, 678,630
rooms, 4,115 properties and 314,000 employees operating in 91 countries and
territories. Moreover, Hilton Worldwide holds a leadership position worldwide in
terms of rooms under construction in every major region of the world and it
serves 127 million guests annually (Annual Report, 2013)

PESTEL abbreviation is interpreted as political, economic, social, technological,

legal, and environmental factors impacting businesses, and PESTEL is an
important framework for assessing external factor impacting business practices.
The following table illustrates the snapshot of PESTEL analysis of Hilton Hotels
for UK:

Political

Economic
National macroeconomic situation in

Political situation in Northern Ireland

UK
and other parts of UK

Extent of economic growth in UK

Acts of terrorism or threat of act of

terrorism

Value of GBP against other major

Impacts of sanctions imposed on currencies

Russia

Rate of inflation
Possibility for UK to exit the EU

Social

Technological
Demographic changes in UK and

Technological breakthroughs in
catering industry

Changes in family patterns

Increasing integration of internet into

various aspects of life

worldwide

Shifting values in society

Increasing role of social media
Environmental
Impact of changes in weather
conditions

Advancing hotel booking

functionalities
Legal
Changes in UK rules and regulations
related to catering industry

Potential damage to the brand image

UK consumer protection rules and
due to environmental pollution
regulations
Seasonality of catering business
Effects of natural disasters

Immigration rules and regulations in

UK