Jumia Nigeria Assignment 1

Use the PESTEL analysis method explained below to answer the following question shown below.

Know the Components of PESTEL Analysis before you answering the questions from this case.

PESTEL analysis is an important and widely used tool that helps show the big picture of a firm’s external environment, particularly as related to foreign markets. PESTEL is an acronym for the political, economic, sociocultural, technological, environmental, and legal contexts in which a firm operates. A PESTEL analysis helps managers gain a better understanding of the opportunities and threats they face; consequently, the analysis aids in building a better vision of the future business landscape and how the firm might compete profitably. This useful tool analyzes for market growth or decline and, therefore, the position, potential, and direction for a business. When a firm is considering entry into new markets, these factors are of considerable importance. Moreover, PESTEL analysis provides insight into the status of key market flatteners, both in terms of their present state and future trends.

Firms need to understand the macro-environment to ensure that their strategy is aligned with the powerful forces of change affecting their business landscape. When firms exploit a change in the environment—rather than simply survive or oppose the change—they are more likely to be successful. A solid understanding of PESTEL also helps managers avoid strategies that may be doomed to fail given the circumstances of the environment. JCPenney’s failed entry into Chile is a case in point.

There are three steps in the PESTEL analysis. First, consider the relevance of each of the PESTEL factors to your context. Next, identify and categorize the information that applies to these factors. Finally, analyze the data and draw conclusions. Common mistakes in this analysis include stopping at the second step or assuming that the initial analysis and conclusions are correct without testing the assumptions and investigating alternative scenarios.

The framework for PESTEL analysis is presented below. It’s composed of six sections—one for each of the PESTEL headings. [1] The framework includes sample questions or prompts, the answers to which can help determine the nature of opportunities and threats in the macro-environment. These questions are examples of the types of issues that can arise in a PESTEL analysis.

PESTEL Analysis

1. Political – How stable is the political environment in the prospective country?

– What are the local taxation policies? How do these affect your business?

– Is the government involved in trading agreements, such as the European Union (EU), the North American Free Trade Agreement (NAFTA), or the Association of Southeast Asian Nations (ASEAN)?

– What are the country’s foreign-trade regulations?

– What are the country’s social-welfare policies?

2. Economic – What are the current and forecast interest rates?

– What is the current level of inflation in the prospective country? What is it forecast to be? How does this affect the possible growth of your market?

– What are local employment levels per capita, and how are they changing?

– What are the long-term prospects for the country’s economy, gross domestic product (GDP) per capita, and other economic factors?

– What are the current exchange rates between critical markets, and how will they affect production and distribution of your goods?

3. Sociocultural –  What are the local lifestyle trends?

– What are the country’s current demographics, and how are they changing?

– What is the level and distribution of education and income?

– What are the dominant local religions, and what influence do they have on consumer attitudes and opinions?

– What is the level of consumerism, and what are the popular attitudes toward it?

– What pending legislation could affect corporate social policies (e.g., domestic-partner benefits or maternity and paternity leave)?

– What are the attitudes toward work and leisure?

4. Technological – To what level do the local government and industry fund research, and are those levels changing?

– What is the local government’s and industry’s level of interest and focus on technology?

– How mature is the technology?

– What is the status of intellectual property issues in the local environment?

– Are potentially disruptive technologies in adjacent industries creeping in at the edges of the focal industry?

5. Environmental –  What are the local environmental issues?

– Are there any pending ecological or environmental issues relevant to your industry?

– How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and People for the Ethical Treatment of Animals [PETA]) affect your business?

– Are there environmental-protection laws?

– What are the regulations regarding waste disposal and energy consumption?

6. Legal

– What are the local government’s regulations regarding monopolies and private property?

– Does intellectual property have legal protections?

– Are there relevant consumer laws?

– What is the status of employment, health and safety, and product safety laws?

 

Now that you have reviewed Jumia-Nigeria case study and the various components of PESTEL Analysis, answer the following question.

Using the PESTEL analysis explain the macroeconomic conditions that influence the marketplace industry?