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1. PESTEL:
Strategic analysis is basically concerned with the structuring of the relationship between a
business and its environment. The external environment which is dynamic and changing
holds both opportunities and threats for the organizations. The organizations while
attempting at strategic realignments, try to capture these opportunities and avoid the
emerging threats. So it is very important for organizations like Intel to study and
understand about the external environment. To do this, we can use the PESTEL
framework.
P POLITICAL
E ECONOMIC
S SOCIO-CULTURAL
T TECHNOLOGY
E ENVIRONMENT
L LEGAL
In PESTEL framework, the external environment is classified into six broad categories:
Political, Economic, Social, Technological, Environmental and Legal. Changes in these
external forces affect the types of products produced, the position of them, market
strategies, types of services offered and choice of business.
Political Forces:
Intel being a multinational company, it has to operate according to different government
policies of different countries depending on the stability of the countries (Writer, 2006)
Politics has a serious impact on the economic environment of the country. Political
ideology and political stability or instability strongly influence the pace and direction of
the economic growth. Politics can consist government stability, political values and beliefs
shaping policies.(Ho Chi Minh City, 2006)Therefore, the politics of a country affect the
investment decision of organizations in this country strongly. Seeing Vietnam has
socio-political stability, Intel were in serious discussion for chip manufacturing in India but
the government was a bit slow on semiconductor manufacturing proposals so therefore it
choose Vietnam. But it took Intel 4 years of negotiation until the Vietnamese government
gave them the license (Rediff News, 2007).
Economic Forces:
The trends are the economic part of the societal environment can have an obvious impact
on business activity (Thomas and David, 2000)
Economic factors throw light on the nature and direction of the economy in which firm
operates. The firms must focus on economic trends in segments that affect their industry.
The economic factors can also be divided into some categories like GNP trends, money
supply, inflation rate, unemployment. Seeing that Vietnam is one of the fastest growing
economies in the South East Asia. Which has grown by 7 to 8 percent a year, It is also the
South East Asias fastest growing PC market and the low cost (low labors cost, low living
cost) (little or no cost pressure) are some of the main reasons why Intel choose to invest in
Vietnam.(BusinessWeek, 2006).
Social * Cultural:
Social values like demographic factors such as population, age distribution, literacy levels,
