PESTEL Analysis for Alpes Joint Venture

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Table of Contents

Political Environment
Economic Environment
Socio-Cultural Environment
Technological Environment
Environmental Issues
Legal Environment
Conclusion

Alpes is a Mexican corporation owned by a family and deals in provision of animal health products and services. The firm was to enter into a joint venture with another firm, the Charles River Laboratories.

The CRL was to undertake the chance and exploit the opportunity of the joint venture in order to increase its profitability. However, before undertaking the venture, it was necessary for CRL to undertake a PESTEL analysis of the joint venture so that it can prepare itself regarding resultant business deals with Alpes.

Political Environment

The political environment involves evaluation of the political impacts on the economy and the friendliness of the political system in Mexico towards the business venture to be established by the agreement between CRL and Alpes.

The political environment in Mexico is very friendly to businesses as it has set policies in place to allow businesses to conduct their operations.

However, Mexico has been portrayed by the media as a country that is full of corruption and doing business in the country is not easy for the joint venture since the firm is bound to lose a lot before it increases its market share. For instance, the directors of Bausch recalled an earlier experience with a Mexican joint venture in which their company was defrauded by a Mexican Optics distributor.

Economic Environment

The economic environment is very important for the joint venture as it will determine the success of the joint venture in Mexico. To begin with, the business environment shows some positive signals to the joint venture as the demand for the eggs products sold by the joint venture was on the rise.

Initially, the cross border trade between two companies from different countries was allowed and the two firms are also allowed to engage in a joint venture. Mexico is doing well economically based on its economic growth figures, which is a positive indicator toward the growth of business for the joint venture.

Socio-Cultural Environment

Demographic figures of Mexico indicate that the country has a population of about 111,211,789 million people that are from different cultures within the country.

Given the country’s economic well being, the large population will provide a ready market for the egg products sold by the joint venture. Alpes will provide goodwill by selling the products of the joint venture in Mexico because it has already established itself with outlets in Mexico.

Technological Environment

Technologically, the joint venture needs to adopt the latest technology in the production of SPF eggs in order to adhere to legal requirements on environmental conservation.

Environmental Issues

Environmental issues are concerned with the conservation of the environment and reduction of global warming. Mexico is one of the countries that have signed a global treaty on reduction of global warming through reduction of emissions. Therefore, the joint venture should embrace technologies that reduce emissions.

Legal Environment

Legally, Mexico has weak legal systems in which the firms operating in the country are not under strict instructions to provide formal financial and other reports in any given financial period.

For instance, the Alpes family business rarely held board meetings annually, there was no transparency and the firm did not have any strategic plans or budgets yet it continues to operate. This is a legal concern for the joint venture since Alpes rarely undergoes public audit of its operations and undertaking the venture may be detrimental for CRL.

Conclusion

The PESTEL analysis has examined the political and economic condition among other conditions of Mexico under which the joint venture will be operating under.

It was revealed that the joint venture needs to be weary of Mexico’s legal systems since the Alpes has been operating without providing audit reports, plans and budgets. In addition, the country has been portrayed as very corrupt thereby raising questions of trust between the two parties.

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