PEST Analysis: Iceland | Market Research Report

RUNNING HEAD: PESTLE ANALYSIS
PESTLE Analysis of Iceland
Student Details
3/12/2020

PESTLE ANALYSIS
Introduction
The economy and mechanism of any country run based on the actions taken in the respective
environment. The marketing functions of a company outside its national boundries are known as
international marketing. In this process there are multiple marketing tactics used by company
like digital marketing, print or video marketing etc. From the research of many scholars in the
past, it can be identified that two types of environments can impact the marketing as well as
overall functioning of a business or country. The environments are internal and external
(Atkinson et al., 2019). From the country's perspective, the external environment and its factors
impact the decisions made by officials of that country. The eternal environment of any country
can be analyzed with the help of a model named PESTLE analysis. In which various factors
distributed in six heads are identified with relation to the country.
In the current project to analyze the international and national marketing conditions as well as
the economy of Iceland, the PESTLE analysis has been done. It is done by analyzing the impact
of political factors, Economical Factors, Social Factors, Technological Factors, Legal Factors
and Environmental Factors on the economy or market conditions of Iceland (BRETOS &
MARCUELLO, 2016).
Country’s Overview
Iceland is a country situated in Europe and considered them part of north island countries and the
geographical region is spread across 40,000 sq mi. The largest city or the capital of the country is
Reykjavik and the official language of Iceland is “Icelandic”. The government of Iceland follows
the Unitary Parliamentary Republic, which is currently led by Johannesson as the President of
the country. Whereas the legislature of Iceland is controlled by Althing or in the Icelandic
language it is Alpingi. The country was formed in the 9th century and since then may rule
applied for its governance (World Bank Data, 2019).
In 1874 the country got its first minister where the constitution is formed and home rule is
applied. In 1960 EFTA accession has been done in-country. As per the World Bank’s report in
2019, the GDP of Iceland is 25 billion whereas its population is around 340 thousand. It is
important to analyze various external factors of Iceland as it can help officials, companies
situated in Iceland or outside it in dealing with the prevailing market conditions effectively and
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efficiently (M.Madera & MaryDawson, 2014). Hence in upcoming lines, the PESTLE analysis of
Iceland has been done productively.
PESTLE Analysis of Iceland
The analysis of the external environment of an organization or a country is done with the help of
PESTLE forces, which can help in identifying various factors from all the corners and analyzing
them to identify opportunities and threats they posses for the company or country to which it is
analyzed for (Golicic & Smith, 2013). It is considered that a professor of Harvard University
named as Francis Aguilar created this PESTLE analysis by specifying the ETPS model in his
book “Scanning of Business Environment” in 1967. In the current study to analyze the market
conditions of Iceland, the PESTLE analysis has been done of the country. It is also done with the
motive of identification of various opportunities or threats that can be faced by the officials of
Iceland and the businesses functioning inside or outside Iceland. It is important for understanding
the international market conditions or the growth of the economy of the country concerning its
competitors. It can help them maintain or grow their economy to greater heights (Baye &
PRince, 2014).
Political Factors
When Iceland's financial structure failed in October 2008, substantial international controversy
emerged in the context of billions of dollars and Euros in foreign loans. Public demonstrations
characterized by the market pots and pans prompted the resignation of the long-time central
banker, Prime Minister Geir Haarde. Since 1944, Iceland has become a secular autonomous
nation (Holburn & Zelner, 2010). The country has been historically comparatively stable and has
been founded in 930 A.D by Althingi, the oldest operating legislative assembly in the world.
Iceland's elections take place within the sense of a federal legislative constitutional republic
wherein the president should be the head of state although Iceland's prime minister is head of
state in a multiparty structure. The largest assembly government in the country, Iceland is
potentially. Iceland's administration is led by a president who puts together a cabinet that is
focused on the efforts of different parties (Goldenberg, 2014).
Given an 8 percent unemployment rate, the stubborn islanders remain unified and forget about
what is called' Greed Culture' and have become a member of other multinational political and
economic parties, while they do not belong to the European Union. The North Atlantic Treaty
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PESTLE ANALYSIS
Organization, the European Economic Union, the Eu Free Trade Agreement, the Economic and
Cooperation Organization, Interpol, the World Trade Organisation, the UN and the Arctic
Council are among the leaders (Yackee, 2013-2014). The business in favour of environmental
friendly production can survive in political environment of Iceland in effective manner. The risk
they might face is the frequent checking of their raw materials, involvement of government, etc
(Goldenberg, 2014).
Economical Factors
Nearly 30% of all employees register for the manufacturing, distribution, maintenance,
immobilization, and financial sectors. New resources constitute 38%. Approximately 7% operate
in farming and forestry, while approximately 9% are producers. Social and health programs
constitute nearly one in seven workers (Dryman & Heimberg, 2018). In 2007, there were
181,500 workers and 54.5% were male and 45.5% female. Unemployment was small at 2.3% in
2007 but exceeded 8.2% in February 2009. In May 2009, the Labour Directorate reports
unemployment at 9.6%. Farming accounts for 5% of GDP, 26.5% for the sector and 68,5% for
utilities.
GDP reached $12,353 billion in 2007 compared with $12.01 billion in 2006, which dropped to
$12,664 billion in 2008, according to the International Monetary Fund. The IMF is predicting a
further 9.8% fall in 2009 to $11,424 billion, a marginal rise of 0.2% in 2010 and 4.9% in 2011
and an expected annual development of 4.9% by 2014. Mainly service-based is the domestic
economy. State operating spending in 2008 accounted for 37% of GDP. Exports cover
aluminium and surgical goods, oil and gas goods, food production machines, and so on alongside
tech services. At present Iceland's key goal is to do it and to preserve its beneficial ties with
imports and exports during the financial crisis (Jenifer & Raman, 2015).
It can be seen that the economic conditions of the country is moderate which is favourable for
international marketing. The figure of GDP and national product of the country make outside
businesses to grow effectively. It is most favourable for business which is based on green energy
concept as it is most concerned by nature (BRETOS & MARCUELLO, 2016).
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PESTLE ANALYSIS
Social Factors
The constitution grants Icelanders religious freedom, while the Icelandic National Church is the
state church, a Lutheran body. As follows: 80.7% of the Icelanders were adherents of the
National Church of Iceland, 6.2% of the non-registered participants or unrecorded faith
communities. 4.9% of the Reykjavík and Hafnarfjörí Free Lutheran Churches. 2.8%, not social
party leaders. About 20-25 other Protestants make up 2.5 percent members of the Roman
Catholic Church and 2.9 percent (World Bank Data, 2019). The model of Hofstede with its basic
stages also helps in understanding the social conditions of the country, where the businesses can
survive by effectively interacting with the community for which they will be or are working
(Beugelsdijk & Kostova, 2017).
The North values of Icelandic society are present. It is common in Icelandic literature,
particularly in the sagas and Eddas that were written in the high and late middle ages. The
Icelandic sagas and prose epics from Iceland's period of colonization are Iceland's best-known
classical literary plays (Jain & Kedia, 2011). Njáls saga on the epic blood feud is among the most
popular. The Icelandic landscape's distinctive depiction by their painters may be associated with
nationalism and the domestic rule movement and freedom, which were extremely successful at
the period (Bai & Zhang, 2012). This comprises vivid Electronic music, traditional and rock
styles, and medieval artists. Music in the Island is associated with Scandinavian Music (Colquitt
et al., 2014).
Technological Factors
In recent years, the Icelandic innovation program has evolved considerably. Iceland's
modernization as well as economic success over the last 5 to 7 years has lauded by most
multinational comparative reports on innovation efficiency. Patent trends are still below average,
as measured in triad inventions, as graduation rates in science as well as engineering, and the
proportions of Iceland's global doctoral clients (Paudyal, 2016). In the last ten years, Iceland's
economy is diversifying into the manufacturing and services sectors, including electronics,
biotechnology and financial; about a quarter of economic activity is embodied by the
manufacturers, while services account for approximately 70%. In specific, eco-tourism and
whale-watchers are widening the tourism market. Iceland attracts nearly 1.1 million tourists each
year, more than three times the indigenous community on average.
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PESTLE ANALYSIS
While corporations tend to fund a large proportion of public research and growth, they have
restricted collaboration with universities (Martinez et al., 2015). Iceland is doing quite well on
entrepreneurship operation and spirit and danger resource rates appear to be strong as a share of
GDP in the Global Business Monitor (1905). R&D, an integral component of Iceland, has greatly
increased the overall efficiency in the last decade. While absolute rates of funding are small
relative to other OECD Nations, Iceland, calculated the share of GDP, has the highest amount of
government-financed R&D in the OECD.
Legal Factors
This has a civil law structure in Iceland and so Icelandic law is established by written legislation.
The constitution, procedural legislation, and administrative laws are primary frames of
legislation in Iceland. Precedent and common legislation are other procedural instruments (JOO
et al., 2016). The Constitutional Act becomes the ultimate independent legal body. In 1874 and
1944, Iceland issued its first constitution. As a basis of regulation, the statute is obsolete, except
for procedural matters.
The increasing uncertainty of economic and social existence has further expanded the quantity
and value of legislation (Dryman & Heimberg, 2018). Statutory actions also allow the
government to issue regulations. Legislative actions triumph over legislation as origins of the
rule. The Legal Gazette, section B, includes public administrative rules and guidelines. The rule
may be received in Iceland through a practice, i.e. being a basis of legislation. For example, in
constitutional relations customary law was an essential source of rule.
Environmental Factors
Iceland is less healthy for its climate than other developing nations, despite Iceland's limited
usage of hydrocarbon coal. Nevertheless, the heavy usage of fertilizers pollutes water resources.
Increased growth of cities often tends to pollute water (Rice, 2013). Iceland has 170 cubic km of
clean water supplies for commercial uses, of which 6% is utilized. The communities of the
country produce nearly 0.1 million tonnes. Industrial production of carbon dioxide fell to 2.1
million tons a year in 1996. It comprises of four countrywide parks covering a sum region of
619,300 hectors as well as 27 nature reserves. This accounts for 9.5 percent of the entire
Icelandic territories, covering an entire of 634,714 acres.
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PESTLE ANALYSIS
The Ministry of Social Affairs is responsible for the climate. It is hard to compete if there are no
networks to both minimize costs through effective supply chain administration as well as deliver
high-quality commodities including components (Machlup, 2014). Vertical convergence is an
option, but that is rarely feasible throughout an entire sector. One species of animal and one
species of the plant became threatened in 2001. The leatherback turtles and four species of
whales are endangered animals (Marin & Verdier, 2014). The major parameters are established
and get extinguished from others.
Conclusion
The PESTLE analysis of Iceland has helped in identifying the factors of production and
infrastructure necessary to compete in a particular industry in Iceland, which can help in business
growth and production (Yuksel, 2012). It requires expertise and natural resources, which can
provide an edge in the early stages of growth. The overview of the PESTEL variables will show
that there are influences that improve or have the potential to increase the income of the
controlling companies in the nation in the external climate of Iceland. However, beyond such
causes, several other influences have distinctive impacts on market conditions. Agricultural
assistance among OECD countries is the largest and possible barrier to systemic reforms, given
lower tax levels.
Iceland's 2008 OECD Economic Report illustrated Iceland's monetary and political problems.
After the global downturn, Iceland's public debt has reduced and is the 31st largest share of
national GDP worldwide in 2015. The Iceland market's economic influence, therefore, played a
key role in ensuring that both national and foreign companies enjoy favourable and rising
economic conditions.
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PESTLE ANALYSIS
Appendix
-Differentials of Iceland’s economy taken from the official website of the World Bank.
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