Pestel for Whisky
PART A: PESTEL analysis on the external business environment of Malaysia based whisky industry.
Political factors • According to International Trade and Industry Minister Datuk Mustapa Mohamed (2010), there will be no tariff reduction on the export of alcohol from Malaysia. This will become a threat to the whisky industry in Malaysia as the price of the whisky will remain high in global market and thus they will lose the competitive advantage on it. The demand of their products will drop as the selling price is high compared to others.
• Based on the Budget 2011, Prime Minister Datuk Seri Najib Tun Razak (2010) said that the government will not further increase the excise duty on the alcoholic beverages for the coming year. This will not further exert the pressure to the whisky industry and also consumers especially in this economic downturn. When the excise duty is not increased, the price for the whisky will not be further raised and therefore the industry is expected to have growth in sales and profits.
• As stated in Budget 2011, the government will increase the service tax from 5% to 6% starting on 1 of January 2011. The advertising expenditure of the alcoholic beverages is expected to be dropped as government proposed to impose service tax on paid television broadcast services. The increase in service tax will definitely cause the fall in the will of whisky manufacturer and seller to advertise through the powerful media, television. As a result, the demand of consumers on whisky will decrease as they will not be aware of the latest news and promotions on whisky.
Economic factors • In the official statistics by Department of Statistics Malaysia, the Consumer price index (CPI) for alcoholic beverages has increased 4% in September of 2010(134.3) compared to the same month in 2009(130.3) in which the base year is in 2005(100). The increase of 4% in CPI for alcoholic beverages indicates that the price for whisky has increased by 4% in a year and this
Political factors • According to International Trade and Industry Minister Datuk Mustapa Mohamed (2010), there will be no tariff reduction on the export of alcohol from Malaysia. This will become a threat to the whisky industry in Malaysia as the price of the whisky will remain high in global market and thus they will lose the competitive advantage on it. The demand of their products will drop as the selling price is high compared to others.
• Based on the Budget 2011, Prime Minister Datuk Seri Najib Tun Razak (2010) said that the government will not further increase the excise duty on the alcoholic beverages for the coming year. This will not further exert the pressure to the whisky industry and also consumers especially in this economic downturn. When the excise duty is not increased, the price for the whisky will not be further raised and therefore the industry is expected to have growth in sales and profits.
• As stated in Budget 2011, the government will increase the service tax from 5% to 6% starting on 1 of January 2011. The advertising expenditure of the alcoholic beverages is expected to be dropped as government proposed to impose service tax on paid television broadcast services. The increase in service tax will definitely cause the fall in the will of whisky manufacturer and seller to advertise through the powerful media, television. As a result, the demand of consumers on whisky will decrease as they will not be aware of the latest news and promotions on whisky.
Economic factors • In the official statistics by Department of Statistics Malaysia, the Consumer price index (CPI) for alcoholic beverages has increased 4% in September of 2010(134.3) compared to the same month in 2009(130.3) in which the base year is in 2005(100). The increase of 4% in CPI for alcoholic beverages indicates that the price for whisky has increased by 4% in a year and this