Spain PESTEL Essay
For some time Spain reached progress ender the aid of agricultural and regional subsidies. Weaknesses Deep economic crises. The same time active government tries to keep power postponing referendum. Hardly ever can be a new government running social services, health care and education can be reelected until 2016. Presence of terrorist groups. There are a lot of suspected terrorist groups in Spain. The most violent, EAT, is responsible for many terrorist attacks. For those acts they deserve life term or death sentence. But, maximum sentence is only 30 years.
Moreover, European Court of Human Rights in Strasbourg provides reductions for good behavior. Opportunities Anti-crises commission was launched by the prime minister in order to secure political settlement and to cope with severe ongoing recession. Some measures were established for fighting the ailing economy in industrial policy, firms’ access to financing and fiscal consolidation. Threats Slowdown of the legislative reform process due to recession. In spite the Spain position in top economies in the Europe in the early nineties it faces economic recession with a widened budget deficit, high unemployment rate and rising inflation.
Economic analysis Since the 2007 the Spanish economy has been in downturn. Though Spain had undeveloped economy until asses
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Economic landscape analysis: Strength European Union membership makes Spain to maintain monetary and fiscal stability according to Masochist Treaty. Competition in energy, telecommunications and electricity was limited. Actually, Spain benefits from its geographical position: gateway between both Latin American and European markets. Spain benefited from Spain PESTLE By shimmering tottering direct intros. Spain was the 7th most attractive country tort investing in the world. Despite Spain’s current recession it might be expected that the country would still be considerate as a good real estate investment sector. Do you know that Government Can Sometimes Improve Market Outcomes?
Weaknesses Economic crises. Economic growth went down to by October 2013. The decline started after the burst of the housing bubble as real-estate sector was the most important driving force of Spain economy. Investment expenditure, exports and consumption have remained poor influenced also by a slump in world markets. High unemployment and rising deflation appeared to be the main challenges of Spain’s government. A downturn in industrial sector was caused by an economic slowdown and the unemployment still continues to rise. Decrease in spending. Loss of Jobs and economic recession led to decrease in consumer spending.
Moreover, customers are no longer able to finance their purchases, spend the same amount of money and obtain loans. Opportunities Austerity plan was announced by the Spanish government for 2011-2013. European Commission revised a Stability Program which showed significant budget deficit and included a program called “sustainable economy’ which aimed to help Spain to overcome crises. The plan was aimed to reduce budget deficit. Liberalizing of government dominated service sectors. European Union directed Spain to open all the government dominated sectors for private investment.
Spain government has verbalized service sectors: transport, telecommunications and energy. Government policy encouraged competition among private entities and public ones. Threats Labor market rigidities and unrealistic wage hikes were caused by government regulations and also by deciding to bind wages to price index. Inflexible employment regulations of hiring and firing have prevented employment opportunities and productivity growth. Spain continues to have very strict but the same time low satisfying labor regime. Prolonged recovery period following global financial crises.
Spain, being a European Union member, the same time is global economy participant. As a result, it was badly affected by the world economic crises. Most Spanish banks were not able to provide loans, and central bank intervention was unavoidable. However, Spanish banks were not privatized. All this factors prolong recovery period. By fall 2013 Spain has overcome recession, but the country is still in crises. However, financial experts came up with a forecast for 2014 that Spanish economy will slightly go up and unemployment rate will decrease.
Social analysis Social landscape of the nation benefited during the economic growth of 1995-2006. Now Spain as member of European Union faced the same challenges: unemployment ND aging population. Less people are able to enter the work force as birth rate has been declining permanently. Spanish education system after important reforms performs above average level. Population healthcare needs are successfully fulfilled by public sector. However, social security expenditures were cut by the government due to the economic crises. Universities were asked to raise the fees. Spain social system analysis: Prudent social welfare measures.
Spain has well developed social welfare measures which are appropriate for other European Union countries. These measures were led in tort to pension system and trade unions retorts. Well-developed education system. In mid ass Spain government increased investments in education and expenditure per student. This lead to an increase in qualified labor force and made it easier to absorb into industrial activities. Weaknesses Aging population. The main challenge is huge proportion of aged people when the same time the birth rate decreases, that means that fewer people are able to replace pension aged workers.
It also means that less and less people contribute payments for social security which leads to increase in pressure on government and decrease n expenditures for healthcare needs of aged population. Growing income inequality. Although, after entrance to European Union Spain economy grew fast, income distribution was unequal. Class divisions become really unbalanced. However, it is supposed that it means little change in income distribution done by economic growth. Opportunities Better employment opportunities. Spanish government activated economic stimulus package. Public works and infrastructure will be invested by this fund.
The government also proposed such new measures as low contributions for companies who use flexible working hours etc. O increase employment. Permanent contracts in labor market. In order to reduce labor market rigidity government passed reforms which are aimed to reduce the number of temporary contract workers and promote permanent workers. It provides long term predictability for employees and enables Spanish firms to invest more in technological advancement and thus create quality jobs. Threats Social tensions caused by the growing number of immigrants. Almost 5 million immigrants arrived in last 1 5 years.
A social protest against the immigrant population became unavoidable as economic crises and rising unemployment rate appeared. Spanish government has proposed some changes in the immigration laws to reduce inflow of immigrants. Imbalanced rural and urban development. Social tensions are also provoked by unequal income distribution among regions. North and east are urbanize and industrialized, the same time as south and west are dominated by agriculture. Madrid, Catalonia and Basque make half of Spain’s GAP. Technological In comparison with other European Union countries Spain was slow to adopt technology.
It also does not have strong innovation climate. Strong need in innovation for private sector and authority funding programs increase innovation system implement. The government also initiated revamping of educational system. It is still needed to create a positive environment by simplifying venture capitalist funding procedure and enhancing incentives. Spain technology landscape analysis: Well-developed CIT sector. Spain has a strong communications equipment market which makes huge profits. Well-developed infrastructure facilitates development of industries which are technology-intensive.
In Western Europe Spanish railway system is considered to be the longest and the best. Also, water transport and air transport are quite well developed. Weaknesses Gross expenditure on research and development remains low. Some improvements in funding are expected to be done by European technology fund, aimed to meet the research financial needs. Involvement to private sector in innovation is too low as government focuses more on extension of technology of existing huge firms and this also affects badly the country innovation climate. Opportunities Government policies promoting research and development.
Spanish government adopted some liberal policies and created new legislative framework to raise some interest for research and development activity. Also, it expects to raise the expenditures of private sector into technology. Significant opportunities in emerging sectors of energy and CIT are presented by Spain. The liberalizing process in energy market changed the electricity sector and allowed consumers to purchase power in open market. The government focused on renewable energy such as wind energy and hydroelectricity and improved energy efficiency plan.
Threats Lack of innovation and low number of patents in Spain are linked together. Spain is far behind the most developed European countries. This trend if continues will hamper the scientific prospects of the country. Environmental analysis Spain started respecting environmental issues later then leading European countries. Actually, this subject was taken into account only after Spain got membership in the European Union. Legislative process was established in 1996 by the Ministry of Environment. Important environmental agreements and obligations were also adopted by Spain.
However, Spain made some comprises on environmental regulations while focusing on economic growth. European Union has directed to draw up new strategy for sustainable development. Government was supported by private sector to improve environmental conditions and to meet required targets. Analysis of environmental landscape: Environmental policy based on the European Union guidelines. A lot of international environmental treaties were ratified by Spain. All the basic policies fit the European Union frameworks and norms.
The main strategy is aimed to reduce GOGH emissions by developing a technical construction code and energy efficient vehicles. Commitment of national and regional governments. Both of them are responsible for the environmental regulations implementation. Spain strong policy, aimed at financing and attracting of environmental infrastructure investment, has resulted in increase in enforcement activities. Weaknesses Poor performance on environmental indicators. Although Spain progressed in international commitments, data analysis showed that Spain faces problems with regional air pollution, climate change and marine environment.
Very little measures on those issues were achieved besides a huge number of solutions under consideration. The real danger brings failure of government to limit CO emissions which increase more and more every year. Lack of financial measures to improve the environment. Spain government strongly needed financial assistance and subsidies o sustain environmental regulations. It also has not paid too much attention to such instruments as environmental taxes (for example charges for water or sewerage) and doesn’t benefit from “polluter pays” principle. Opportunities Moving towards sustainable tourism.
Spain is the second most attractive tourist destination after France. Tourism about one tenth of Spanish GAP. The government worked out a sustainable tourist program to protect environment and the same time dully use potential to this sector. Meeting energy needs through renewable energy. Spain consumption of electricity highly increased, so a strong need in renewable energy appeared. The government offered incentives to attract investment for developing renewable energy. Threats Curtailing environment expenditure. Spain faced the necessity of balancing environmental policies and economic growth.
The economic crises and recession forced Spanish government to reduce its expenditures on the environmental issues in favor of social and economic priorities. Increasing desertification. Probably, due to global warming Spain faced a reduction in rainfall capacity and the worst drought in five last decades. That led to government’s decision to reduce water consumption ND this in its turn led to deterioration of living conditions. Some regional authorities preferred to impose huge fines for use of excess water. Some experts predicted that Spain is located in desertification high risk zone.
Climate change may lead to transformation of half of Spain territory into desert. So strong solar radiation destroy green zones by burning down forests and grasslands. Legal analysis For ensuring integration in European Union Spain initiated legal reforms. To encourage private investments Spanish government reduced tax rates, eased investment regulations and opened restricted sectors. However, the country was submitted to government intervention. Government plays critical role in economic sector by interference in the labor market and by restriction of access in some sectors.
Spain is divided into provinces, Judicial districts, autonomous communities and municipalities for Jurisdictional purpose. Analysis of legal landscape: Legal framework comparable to other European Union nations. To create a successful business environment regulatory and legal aspects are important. Spain’s regulatory regime has transparent and comprehensive laws to carry out any operation and to establish companies over its territory. Those laws are similar or in line with the other countries of European Union. Openness to foreign investment. Spain climate for foreign investment is reasonably friendly.
Total foreign direct investment in Spain grew as law permits to invest up to full sum. Foreign investment was used in many sectors such as hotels, estate, agro-based products, telecoms and manufacturing. Weaknesses Labor market regulations are rigid in Spain in comparison with other European Union nations. Spain government implemented measures to reduce the temporary contract workers number. Although, one-third is still classified as temporary hires. Wages are related to labor productivity not directly. Such wage rigidity affects badly nation’s competitiveness. Government intervention in the market.
Still, there are sectors dominated by Spain government where competition is restricted. For example, tariffs in the energy. There is no possibility to enter the market for international players. Some operations of private sector in retail segment are restricted by regional regulations. Competition was restricted in mobile phones and internet services sectors. Opportunities Competition policy to reduce market rigidities. A process for strengthening product racket competition was initiated by Spanish government. Such sectors as transports, telecoms and energy were partly opened by the government.
New competition commission, which is expected to be more independent, was establish Government proposed to set up sector regulatory bodies to increase competition. All these measures are aimed at reducing market rigidities. Government measures to reduce corrupt practices and tax evasion. Government already took effective measures to combat corruption in order to improve the investment climate. Also, government passed a tough law to fight against tax evasion as well as issued strict isolations of combat money laundering in the financial and banking sector.
Threats Excess of national and regional regulations. Varied regulations make it difficult for investors to work around the country. It appeared that sometimes regional regulations are parallel to national law. Overall Conclusion After a deep integrated overview of the most important aspects of Spain, country we chose to implement our project “Careful Express”, we can conclude that current situation in Spain is not really favorable due to economic crises. However, Spain has already passed recession and experts forecast economic stabilization in nearest true.
Our strong point is that we already have big Careful outlets around Spain, which do pretty good. It means that population is already aware of what Careful is, products quality and personnel. As our target audience is busy people or people, who do daily shopping for one person or non-augmented family, and who need small supermarkets right to hand, we can still expect that our project will succeed. All the regulations processes, environmental and social issues do not appear as a problem as Careful Company already worked successfully in this market and we Just have to follow the beaten path and same strategy.