Use the Pestel Framework to Analyse the Current External Business Environment for Issues That May Affect Your Firm.

Business Environment Pestel analysis appendix

Use the PESTEL framework to analyse the current external business environment for issues that may affect your firm.

Political

The Government have a very strong force on the liqueur and spirit market and their environment as they regulate the laws and terms which manufactures, suppliers must comply with, and also control the import of foreign liqueur and spirits.

- “The standard rate of VAT is currently 17.5 per cent but will be increased to 20 per cent on 4 January 2011.” (HM Revenue & Customs 2010). This future increase in VAT could help boost short term sales due to consumers wanting to buy, for example, Whisky before the price increase but in the long-term it will most likely effect sales due to increased price again on a ‘luxury item’ in an already struggling economy.

- With the new budget report out alcohol taxes have increased “Other alcohol duty rates will increase by 2 per cent above inflation.” (Budget 2010) This includes spirits and will increase the overall price of Whisky items with tax up by 36p on a 750ml bottle.

- “Supermarkets will be banned from selling wine, beer and spirits below the cost of duty on the product plus VAT.” (Hennessy 2008) Public Health Minister Simon Burns said: "What the government has done over the last few months is consult and look into the whole area of alcohol-related problems and consider whether or not to stop the supermarket from selling alcohol below cost and looking at the licensing laws because we believe that every Friday, Saturday night there are too many incidents up and down the country with people fuelled by alcohol causing anti-social behavior, acts of violence and criminal activity.” (news 2010). With Supermarkets being one of the most important sellers to the whisky market this increase in a minimum cost on whisky spirits will be a massive competitive downturn to market. It means companies will not be able to battle for market share as effectively as they...