Pestal Analysis

PESTEL Analysis:

A framework used to scan an organization of its external environment analysis from many different angles that one wants to check and keep a track of while contemplating on a certain idea/plan, in terms of political, economic, socio-cultural, technological, environmental and legal aspects is abbreviated as PESTEL analysis. Based on Charles Rivers Laboratories (CRL)’s joint venture proposal for specific pathogen-free (SPF) egg farm with ALPES a Mexican based firm is taken as a base to explain this PESTEL analysis.

Political: The North American free trade agreement (NAFTA) was effective in 1994, which was built by the three federal governments of Canada, U.S. and Mexico to facilitate the free flow of goods and services among three countries. Fearing increased competition from imports, some business left Mexico. However, vaccine producers increased production in Mexico to meet the increasing demand of the U.S. and Canada. At the meanwhile the competition from imports failed to materialize. On overall, the NAFTA had positive effect on CRL, ALPES and Mexico market.

Economic: Statistically the demand for specific pathogen-free (SPF) eggs had exceeded supply by 5 to 10 % in the worldwide. Specific Antigen-Free Avian Service another firm in U.S. had more than doubled its annual revenues rapidly and improved its operating margin to 20%. To cope with this growth, CRL continuously invested capital in expanding domestic SPF egg production capacity. As the exclusive franchisee of SPAFAS within Mexico and Central America, ALPES also benefited from the excess demand of SPF eggs in its market area. But, it was well known that the most unfavorable economic factors to prevent business success in Mexico were the endemic corruption, economic instability and unstable currency.

Socio-cultural: According to the U.S. department of agriculture, the study showed that an estimated 4 million illnesses and approximately 3,000 deaths were caused by the bacteria from...