PESTLE analysis is the study of macroeconomic factors that could affect the business of the company in the market. Analyzing such factors at the right time is useful to take care of outside challenges at the right time. Big firms like DHL always conduct such analysis before starting a new venture or new idea. Let us know about “DHL PESTLE Analysis”
PESTLE analysis of DHL, which is a courier service firm operating worldwide, is the study of Macroeconomic factors that could affect the growth and efficiency of the firm. DHL conducts such analysis to plan and put business strategies based on challenges they are facing from the outside world in their courier company. The factors which affect the company’s business could be political, economic, social, technical, legal, or environmental.
What Is PESTLE Analysis?
Like the SWOT analysis, PESTLE is another method of analyzing various outside factors that could affect business. Timely analysis of these factors keeps the company aware of the upcoming challenges. Additionally, effective use of such information can open up various opportunities to grow business and market reach for the company. PESTLE analysis studies macroeconomic factors like –
P- Political Factor
E- Economic Factor
S- Social Factor
T- Technological Factor
L- Legal Factor
E- Environmental Factor
PESTLE Analysis Of DHL
Political Factors:
DHL has expanded its market worldwide. Hence, it has to look after the political changes taking place in every corner of the world. In Europe, the government policies related to trade do not change continuously, providing a balanced political environment to the company.
In other countries, changes in taxation, duties, internal imbalance, change in policies could put major challenges in front of the company. It could reduce the market of DHL by reducing its sales. An increase in tariffs due to import and export restrictions will increase the cost in that particular country, as a result, DHL may lose its market.
Other than these, the company will earn more benefits from the countries where the cost of labor is less. This will reduce the cost of production for the company and increase its profit. Additionally, to attract more investors, the company should assure that the intellectual property of DHL will be protected under the laws of the country in which they are operating.
Economic Factor:
The economic factors put a major effect on the growth of the company. A country with a high inflation rate is not ideal geography to invest in. Because due to the price rise, the purchasing power of the people of the country will decrease. DHL will lose its customers and the company will face loss in investments.
When you operate in foreign countries, their exchange rates should be taken care of. A country with an unstable exchange rate will bring losses and instability for the company. Therefore, investment should be made in countries with stable foreign exchange rates.
The interest rates of countries are an important part of economic factors. Higher internet rates attract more investors for DHL in growing their market in foreign countries. Unemployment is another benefit for the country. In the countries with high levels of unemployment, cheap laborers could be easily found. This will reduce the cost of production and increase the profit of DHL.
Social Factor:
DHL is a courier service providing firm, which may not earn expected success in the counties where people are predetermined to buy only from the local market. There are countries where people prefer buying from the local market. Here, the need for a courier company is not so necessary for people to get their products delivered home. Online shopping is not so popular in such countries. DHL could not capture a huge market in such counties.
Additionally, the majority population of developing and underdeveloped countries couldn’t nor afford the service of high-end companies like DHL. Hence, DHL will not be able to capture the huge market and expected success in such countries.
Online shopping is a habit of the young population. The older people believe more in shopping from the local market. Hence, investing in counties where the youth population with technical advancement is more will be more beneficial for DHL. The study of consumer behavior and behavior of the majority population of the concerned country becomes impossible for DHL.
Technological Factor:
With the growth of technology and social media, the ways of business operations have changed tremendously in the whole world. To operate effectively in any country, the best technical medium which can earn huge market reach with minimum investment is social media marketing.
The company necessarily adopts technological advancement to stay in the market. The features like tracking id of product and tracking shipment are the major technological updation in the field of service providing firms. This will increase the trust of people in the company and improve its position in the market. The cost of adopting technological changes is high, but it could be easily covered with the high profit that these changes could bring for the company.
Legal Factor
There are quality standards, consumer protection acts, safety and privacy policies, laws against discrimination, and standards for employees, their remunerations, and working conditions. These laws should be considered by DHL to operate in any country.
Data privacy has become a very important issue in recent times. With the news of leaking consumers’ data by many big companies, countries have now become more strict regarding the privacy of the people over the internet. DHL operates its business on the internet, it has access to certain personal data of customers hence analyzing related laws in concerned countries is very important.
The company is also responsible for ensuring customer satisfaction, providing products as described, and timely right delivery. And negligence in these activities would lead to legal action against the firm in many countries.
Several employees work for DHL at various levels. Many countries have laws regarding minimum wages of laborers and employees, standards of working conditions, working hours, and other specifications in their law. There are laws also to protect the equality of people in the business. The punishments of breaching such laws could be hard and affect the reputation of the firm.
Environmental Factor
The service-providing companies must take care of the environmental condition of the geography they are operating in. Weather conditions can affect the efficiency of the DHL by affecting the pace of transportation.
Secondly, DHL is engaged in transportation, hence they need to keep their vehicle environmentally friendly. Otherwise, they could face serious allegations under the law by the government and people.
Conclusion
The political, economical, social, technical, legal, and environmental factors affect the business tremendously. It could be beneficial as well as detrimental for the DHL. Being a service-providing company, DHL has to analyze various factors so that it could take away from all the challenges and build the most advantageous opportunity for the company.
FAQ
- How can an increase in tariff charges affect the growth of DHL in a foreign market?
Answer: High tariff charges will increase the cost of production, as a result, the company has to provide its services at a higher price, which will shift its customers to other brands.
- Why is PESTLE analysis important for DHL?
Answer: PESTLE analysis gives crucial details about the outside factors that could affect a company’s growth. By making strategic use of this information, DHL can explore more opportunities, save costs, and improve its market position.
