Pestel Analysis of JAPAN Chapter Two
Pestel Analysis In this part we have talked about the definition and various aspects of our findings.
2.1 DEFINITION Ther Th eree are are many many fact factors ors in the the macr macro-e o-envi nviron ronme ment nt that that will will effec effectt the decisi decision onss of the the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these facto factors rs mana manager gerss can categ categori orise se them them using using the PEST PESTEL EL mo mode del. l. Th This is class classifi ifica cati tion on distinguishes between: government intervenes in the Political factors: Political factors are how and to what degree a government econo economy my.. Speci Specifi fica cally lly,, polit politica icall fact factors ors includ includee areas areas such such as tax tax polic policy, y, labou labourr law, law, environmental environmental law, trade restrictions, restrictions, tariffs, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factors: Economic factors include economic growth, interest rates, exchange rates
and the inflation rate. These factors have major impacts on how businesses businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange Exchange rates affect the costs of exporting exporting goods and the supply and price of imported goods in an economy Social factors: Social factors include the cultural aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasi increasing ng the cost of labor). labor). Furtherm Furthermore, ore, compani companies es may change change various various managem management ent strategies to adapt to these social trends (such as recruiting older workers). Technological factors: Technological factors include technological aspects such as R&D
activity, automation, technology incentives and the rate of technological change. They can
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determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation. Environmental Environmental factors: Environmental factors include ecological and environmental aspects
such as weather, weather, climate, and climate climate change, which may especially affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. Legal facto factors rs inclu include de discri discrimi mina natio tion n law, law, consum consumer er law, law, antit antitrus rustt law, law, Legal factors: factors: Legal empl employm oyment ent law, law, and healt health h and and safet safety y law. law. Th These ese fact factors ors can affect affect how a comp company any operates, its costs, and the demand for its products.
2.2 JAPAN Japan officially the State of Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south. The characters that make up Japan's name mean "sun-origin" which is why Japan is sometimes referred to as the "Land of the Rising Sun".
2.3 POLITICAL FACTORS 2.3.1 FORM OF GOVERNMENT Japan has constitutional constitutional monarchy as its current form of government. However the Emperor is only a ceremonial figurehead and his powers are very limited. He is defined by the constitution as "the symbol of the state and of the unity of the people". The Prime Minister holds the power with the elected members of the Diet (Japan’s parliament). Akihito is the current Emperor of Japan. Naruhito, Crown Prince of Japan, stands as next in line to the throne.
2.3.2 CURRENT PARTY IN POWER In 2009, the social liberal Democratic Democratic Party of Japan took power after 54 years of the liberal conserva conservativ tivee Libera Liberall Democra Democratic tic Party's Party's rule. rule. Naoto Naoto Kan current currently ly serves serves as the Prime Prime
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Minister of Japan. Sadakazu Tanigaki is now the leader of the main opposition party of Japan.
2.3.3 ECONOMIC STRUCTURE From From 1868, 1868, the Meiji Meiji period period launched launched economi economicc expansio expansion. n. Meiji Meiji rulers rulers embrace embraced d the concept of a free market economy and adopted British and North American forms of free enterprise capitalism. Japanese went to study overseas and Western scholars were hired to teach in Japan. Many of today's enterprises were founded at the time. Japan emerged as the most developed nation in Asia.
2.3.4 CURRENT POLITICAL SITUATION Japan is a member state of the United Nations and a non-permanent member of the Security Council. Now it is seeking permanent membership. As an economic power, Japan is a member of the G8 and Asia-Pacific Economic Cooperation (APEC), and has developed relations with ASEAN as a member of "ASEAN plus three" and the East Asia Summit. It is a major donor in international aid and development efforts, donating 0.19% of its Gross National Income in 2004. Japan Japan curren currentl tly y has has terr territ itori orial al disput disputes es with with Russi Russiaa over over the Kuril Kuril Island Islandss (Nort (Norther hern n Territ Territorie ories), s), with with South South Korea Korea over Liancourt Liancourt Rocks, Rocks, with with China China and Taiwan Taiwan over the Senkaku Islands and with China over the status of Okinotorishima. These disputes are in part about the control of marine and natural resources, such as possible reserves of crude oil and natural gas.
2.4 ECONOMIC FACTORS The economy of Japan is the third largest in the world after the United States and the People's Republic of China but ahead of Germany at 4th. Some of the main aspects of its economy are given below:
Currency : Japanese Yen (JPY)
GDP : $5.073 trillion (2009)
GDP growth :
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0.4%
Pestel Analysis of JAPAN
GDP per capita : $39,573 (2009)
Inflation (CPI) : -1.3% (2009 est.)
Population below poverty line : 13.5%
Unemployment : 5.6%
FDI stock : $205.4 billion (31 September 2009 est.)
Exports : $516.3 billion f.o.b. (2009 est.)
Imports : $490.6 billion f.o.b. (2009 est.)
2.5 SOCIAL FACTORS 2.5.1 FAMILY LIFE The monogamous and patriarchal patriarchal family has been prevalent prevalent in Japan since the 8th century. If a wife were childless the husband often kept a concubine, whose offspring succeeded to the headship of the family, family, thus securing its continuation. continuation. When neither wife nor concubine bore him a child, custom allowed the family head to adopt a successor. One male offspring who is to succeed to the headship of the family lives with his parents after his marriage. He assumes the headship and has to take care of the parents when they have become aged.
2.5.2 RELIGION Mostt Japane Mos Japanese se peopl peoplee do not exclu exclusiv sivel ely y ident identify ify them themsel selve vess as adher adherent entss of a singl singlee religion; rather, they incorporate elements of various religions in a syncretic fashion known as Shinb Shinbuts utsu u shū shūgō. gō. Mo Moreo reover ver Japan Japan grants grants full full reli religio gious us freedo freedom, m, allo allowi wing ng minor minorit ity y religions such as Christianity, Islam and Sikhism to be practiced.
2.5.3 EDUCATION Japan's education system played a central part in Japan's recovery and rapid economic growth in the decades following the end of World War II. Education is compulsory at the elementary and lower secondary levels. Virtually all students progress to the upper secondary level voluntar voluntarily. ily. Most students students attend attend public public schools schools through through the lower lower secondar secondary y level, level, but
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private education is popular at the upper secondary and university levels. Its literacy rate is 99.0%.
2.5.4 LANGUAGE Japanese is the official language of Japan. More than 99% of the population speaks Japanese as their first language. However students have to learn English in schools.
2.5.5 HEALTHCARE SYSTEM Thee Healt Th Health h care care sys syste tem m in Japan Japan provid provides es healt healthca hcare re servic services, es, inclu includin ding g screen screening ing exami examinat natio ions, ns, prenat prenatal al care care and infect infectio ious us disea disease se contr control ol,, with with the the patie patient nt accep acceptin ting g responsibility for 30% of these costs while the government pays the remaining 70%. Payment for personal medical services is offered through a universal health care insurance system that provides relative equality of access, acces s, with fees set by a government gov ernment committee. People without witho ut insur insuranc ancee throu through gh emplo employer yerss can can parti partici cipa pate te in a natio national nal heal health th insur insuran ance ce progr program am administered administered by local governments. governments. Patients are free to select physicians or facilities of their choice and cannot be denied coverage. Hospitals, by law, must be run as non-profit and be managed by physicians. For-profit corporations are not allowed to own or operate hospitals. Clinics must be owned and operated by physicians.
2.6 TECHNOLOGICAL FACTORS 2.6.1 INTERNET By September 2007, Japan had 27.7 million broadband lines in place, making it the third largest largest broadban broadband d count country ry in the world world after after the the USA and China. China. 78.2 78.2 %
people people in Japan Japan
uses internet now. Much of the success of Internet in Japan is owed to the stunning growth in 2003 of ADSL as a broadband technology. Other broadband services such as Fibre-to-theHome (FttH) have also piqued the interest of the Japanese public. This report looks at the natur naturee of the broadb broadban and d marke market, t, the the major major broad broadba band nd provi provider derss and acces accesss meth methods ods – including including cable modem, ADSL, FttH, broadband broadband over powerline and wireless broadband. At present, around 54% of cellphone users access Internet from a mobile phone at least once a
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week, while last year only 40% of users did so. The crown of the most active mobile Internet users belongs to the group of 12-19 year old school girls.
2.6.2 MOBILE PHONES Japan’s telecommunications sector is one of the most active markets in the world. This market has witnessed the growth of VoIP and triple play services, continued 3G competitions among among mo mobi bile le operat operator ors, s, notew notewort orthy hy uptake uptake of FttH FttH and stride stridess in digit digital al and mo mobil bilee broadcasting. This report repor t presents a range of key statistical indicators and an overview of o f the Japanese telecom market.
2.6.3 AUTOMATION Japan Japan is very very advanc advanced ed in autom automat atio ion. n. Mo Most st of the office officess and form formss are autom automat ated. ed. Hospitals, restaurants, offices, airports, factories and all the other facilities are highly efficient because of the use of high tech automated system. Japan is also als o famous for its contribution in the robotics field. Most probably it is the most advanced country when it comes to robotics. And they are using this knowledge in use for practical aspects of life. Now people are very accustomed to buying their train tickets, books, plane pass, doing shopping online. And all these is possible because of the spread of internet and automated system installed.
2.7 ENVIRONMENTAL FACTORS 2.7.1 GEOGRAPHY Japan is a country of over three thousand islands extending along the Pacific coast of Asia. The main islands, running from north to south, are Hokkaidō, Hokkaidō, Honshū, Shikoku and Kyūshū. The Ryukyu Islands, including Okinawa, are a chain of islands south of Kyushū. Together they are often known as the Japanese Archipelago. About 70% to 80% of the country is forested, mountainous, and unsuitable for agricultural, industrial, or residential use. This is because of the generally steep elevations, climate and risk of landslides caused by earthquakes, soft ground and heavy rain. This has resulted in an extremely high population density in the habitable zones that are mainly located in coastal areas. Japan is one of the most densely populated countries in the world
2.7.2 WEATHER
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Japan is generally a rainy country with high humidity. Because of its wide range of latitude, Japan has a variety of climates, with a range often compared to that of the east coast of North America, from Nova Scotia to Georgia. The warmest winter temperatures are found in the Nanpo and Bonin Islands, which enjoy a tropical tr opical climate due to the th e combination co mbination of latitude, distance from the Asian mainland, and warming effect of winds from the Kuroshio, as well as the Volcano Islands. The hottest temperature ever measured in Japan, 40.9 °C (105.6 °F), occurred in Tajimi, Gifu on August 16, 2007.
2.7.3 NATURAL HAZARDS Ten percent of the world's active volcanoes are found in Japan, which lies in a zone of extre extreme me crust crustal al insta instabil bilit ity. y. As many many as 1,500 1,500 earthq earthquak uakes es are recor recorded ded yearl yearly, y, and and magnitudes of four to six on the Richter scale are common. Minor tremors occur almost daily in one part of the country or another, causing slight shaking of buildings. Major earthquakes occur infrequently; infrequently; the most famous in the twentieth twentieth century was the great Kantō earthquake of 1923, in which 130,000 people died. Undersea earthquakes also expose the Japanese coastline coastline to danger from tsunamis and tidal waves. Other common hazards are typhoons that reach Japan from the Pacific.
2.7.4 POLLUTION Current Japanese environmental environmental policy and regulations regulations were the consequence consequence of a number of environmental disasters in 1950s and 1960s. Cadmium poisoning from industrial waste in Toyama Prefecture was discovered to be the cause of the extremely painful itai-itai disease which causes severe pain in the back and joints, contributes to brittle bones that fracture easily, and degeneration of the kidneys. Recovery of cadmium effluent halted the spread of the disease, and no new cases have been recorded since 1946. In the 1960s, thousands of inhabitants of Minamata City in Kumamoto Prefecture were poisoned by methylmercury drained from the chemical factory, known as the Minamata disease. The number of casualties in Minamata is 6,500 as of November 2006. In Yokkaichi, a port in Mie Prefecture, air pollution caused by sulfur dioxide and nitrogen dioxide emissions emissions led to a rapid increase in the number of people suffering suffering from asthma and bronchitis. In I n urban areas are as photochemical photochemica l smog from automotive and industrial exhaust e xhaust fumes
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also caused the rise in respiratory problems. In the early 1970s, chronic arsenic poisoning attributed to dust from arsenic mines occurred in Shimane and Miyazaki prefectures. Japan's environmental policy has reflected a tenuous balance between economic development and environm environmenta entall protecti protection. on. As the world's world's leading leading importe importerr of both exhaustible exhaustible and renewable natural resources and one of the largest consumers of fossil fuels, the Japanese government takes international responsibility to conserve and protect the environment.
2.8 LEGAL FACTORS The modernization of the Law of Japan was based on the European legal system. In this article however we have focused on laws that are related to business.
2.8.1 CORPORATE LAW Japan's current corporate law is based upon the Corporations Code implemented in 2006. Under Japanese law the basic types of companies are:
Kabushiki kaisha (K.K.), similar to an Anglo-American corporation
Godo kaisha (GDK), similar to an American limited liability company
Goshi kaisha (GSK), similar to an Anglo-American limited partnership
Gomei kaisha (GMK), similar to an Anglo-American general partnership
Limited liability partnerships
2.8.2 TRADEMARK LAW Japanese trademark law is mainly enacted by the Trademark Act of 1959. Under Japanese tradema trademark rk law, law, only register registered ed tradema trademarks rks establis establish h a tradem trademark ark right right (Artic (Article le 18), and examination procedure is necessary for trademarks to be registered (Article 14). A person first to file an application may obtain the registration for a trademark over a prior user of the same trademark.
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2.8.3 LABOUR LAW Japa Japane nese se labo labour ur law law is the the syst system em of labo labour ur law law oper operat atin ing g in Japa Japan. n. Cond Condit itio ions ns of employment must be clearly set out in the employment agreement or in supplementary rules which are provided to the employee. Minimum Minimum wage laws: the actual amount is based upon the local cost of living
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and therefore varies from region to region Working hours: Maximum full-time working hours in Japan are eight hours
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per day and 40 hours per week. If an employee works six to eight hours in a day, they are entitled to a 45-minute break; if an employee works eight hours in a day, they are entitled to a one-hour break. Leave: The Labor Standards Act prescribes minimum periods of paid annual
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leave based on an employee's seniority. Several forms of unpaid leave are also provided by law, including maternity leave, leav e, child care c are leave, family care leave le ave and nursing leave. Prohibi Prohibiting ting Discrim Discrimina ination tion:: Articl Articlee 4 of Labor Labor Standar Standards ds Law prohibi prohibits ts
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discrimination in pay based on gender. Article 3 of Labor Standards Law prohibits ethnic, eth nic, national nationa l and religious discrimination dis crimination by employers in regards to work conditions.
2.8.4 CONSUMER CONTRACT ACT The Consumer Contract Act 2000 was enacted in 1999 and enforced on 12th March 2000. The law regulates not only unfair consumer contract, but also unfair commercial practices, misleading misleading and aggressive aggressive conduct. Whilst unfair contract terms and conditions conditions are regulated regulated in the Specific Specific Commercial Practices Practices Act, the law applies only specific trading practices. On the other hand, unfair commercial practices are regulated on the SCPA which stipulates the civil sanction to the conduct against the law, but the requirements are a little bit different from the CCA.
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