PESTEL Analysis of TopShop in China - Essay Example

PESTEL Introduction PEST analysis is a very important tool used in Strategic management. It uses different measures and benchmarks to analyze the environment in which the business in operating. This is a key tool when scanning external environment for macroeconomic indicators. There are many different forms of the standard PEST. In UK a different form is used which adds Legal and Environmental to the standard PEST and thus changes the abbreviation to PESTEL. Top shop is a clothing and apparel chain that operates in more than 20 countries all around the world.

Owned by the Arcadia group recently TOP Shop has decided to launch itself in China. The decision came to public knowledge in 2007when Top Shop signed a deal to own a store in Shanghai Super Brand Mal which is located in the hub of financial activity in China. PoliticalThe intervention of Chinese government in the economy is very high. This is because China has the social system of government. As a multinational the competition laws are very important. The local government must give foreign firms equal opportunity in the market.

This is a severe issue in China, as the government supports its local companies at all cost. EconomicThe Economy of China is booming and has the fastest growth rate over the last two decades by a long margin. After the economic recession in the western world, china has further gained a very dominating position in world markets. The GDP of China is reported at 4.91 trillion USD. Moreover a staggering GDP growth of 8.3% has been shown by China. Another important factor is the increase in per capita income of Chinese people.

This factor is directly related to investment decision of a apparel company. SocialThe society of China is quickly changing. There was a time when china was called a city of bicycles. The situation has however changed over the last few years. The increase in income levels of Chinese consumer has ensured that their life styles have also changed. New imported Mercedes cars can be seen on streets of China. Fashion icons such as Gucci, Dolce, Zara etc are part of this new social shift in Chinese culture.

TechnologicalChina is equipped with latest manufacturing technology. The fact that they are the world’s largest outsourcer is a testament to this statement. The Chinese government has long fostered a culture of importing and locally encouraging the use of latest technology to foster China’s growth as the world’s first choice in outsourcing. EnvironmentalDue to its very large area China experiences a diverse range of climates. The northern zone has a day time temperature of more than 30 degree Celsius and winters of arctic severity.

The central zone which includes Shanghai has a very continental climate. The southern zone has a sub tropical climate, which is marked by very hot summers and mild winters. LegalThe Chinese government is a Social entity. The policy of China towards foreign investors however has always be that of welcome. The legal system of China supports and encourages foreign companies and investors. ReferencesHaggett, P. (2001). Encyclopedia of World Geography, Volume 23Busky, D. (2002). Communism in History and Theory.

Greenwood Publishing Group Chen, B. Yi, F. (2000). Determinants of economic growth in China: Private enterprise, education, and openness. China Economic ReviewYongding, Y. (2008). China & World Economy. CASS