Manufacturing Industry focuses on producing products and goods by employing chemical formulation, processing, tools, machines, labor, and others. It is the main pillar of the country’s economy and it plays a key role in the growth and development of the country. However, the manufacturing term refers to industrial-designed finished goods, high-tech products and services, and handicrafts. Today, we’ll discuss the PESTLE analysis of Manufacturing Industry; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Manufacturing Industry
Some of the main political factors in the Manufacturing Industry PESTLE analysis are as follows;
I-Government Regulations
Government regulations are very strict and tough for Manufacturing Firms when it comes to the health and safety of employees and workers. The government sets the minimum wage laws for the production and manufacturing companies, working hours, workplace conditions, safety protocols, and other employee safety laws. However, the objective is to protect the health and safety of individual workers.
II-Trade Policies
The trade laws and policies of different countries vary depending on the country’s regulatory institution. Manufacturing Firms need to hire and recruit migrant workers from foreign countries to perform their production operations. In order to smoothly perform their functions, they need to comply with the trade policy and regulations of both countries and the international employment laws.
III-Political Stability
A stable political environment plays a key role in the growth of manufacturing companies. When the country is going through political turmoil, roadblocks, processions, strikes, and other violence; it negatively impacts the company’s operations. The Manufacturing Firm won’t receive the raw supplies on time, workers and employees are fearful of leaving the house, and constant threat of security breaches to the company.
Economical Factors Affecting Manufacturing Industry
Some of the main economic factors in the Manufacturing Industry PESTLE analysis are as follows;
I-Economic Recession
The global economy has been going through economic recession for the past few years. Businesses and companies are downsizing due to lower sales, higher unemployment rates, limited productivity, and lower purchasing power of ordinary users. However, it is a type of circular effect, where one factor is negatively impacting the other.
II-Labor Cost
The labor cost is increasing due to the amendments in the minimum wage laws. It is compelling Manufacturing Firms to outsource their production operations in third-world countries where the labor cost is cheap. However, their objective is to reduce the labor cost and gain a retail price competitive edge over competitors.
III-Overhead Cost and Expenses
Manufacturing Firms are facing the other challenge of higher overhead costs and expenses. They comprise higher taxes, utility bills, salaries of employees, fuel prices for procuring raw materials and supplies, and other variable costs and expenses. Collectively, they could negatively impact the sales, revenue, and profitability of the company.
Social Factors Impacting Manufacturing Industry
Some of the main social factors in the Manufacturing Industry PESTEL analysis are as follows;
I-Safety and Working Conditions
The consumer market is becoming well aware of the health and safe working environment of the Manufacturing Firms. They share their working experience with the company and the employer over social media with star ratings. However, employee reviews and star ratings attract and repel potential employees to the company and the employer.
II-Consumer Needs and Preferences
The customer market needs and preferences keep changing due to various factors. Manufacturing Firms need to conduct a thorough market research and pay a close head on the growing market trends. However, it allows them to develop the right product for the customer’s market on time relevant to the customer’s needs and demands.
III-Socio-Cultural Factor
Socio-cultural factor plays a key role in impacting the customer market needs and preferences. For instance, the customer market is becoming environmentally conscious and they prefer brands and products that are engaging in sustainable activities and practices. Manufacturing Firms should engage in the right practices relevant to the requirements of the customer market.
Technological Factors Affecting Manufacturing Industry
Some of the main technological factors in the Manufacturing Industry PESTEL analysis are as follows;
I-Advanced Technology
Manufacturing Firms invest a significant amount of capital resources in advanced technology like automated processes, AI, and ML. Often, the production processes comprise repetitive tasks and activities, which amplifies the risk of human error due to boredom and monotony. The automation technology would help them to smoothly perform their operations without any errors.
II-Data Analytics
Manufacturing Firms invest a lot of resources in the data analytical technology. It comprises analyzing the previous sales data and predicting the demand for the upcoming seasons. However, it helps them to avoid over-stocking and under-stocking issues, which are highly expensive for the production and manufacturing firms.
III-3D Printing
3D printing is the latest technology breakthrough in the Manufacturing Industry. Various production and manufacturing companies are investing in the infrastructure of 3D printing technology. However, it would help them to develop and produce any imaginable product and good to satisfy the customer market needs and demands.
Legal Factors Impacting the Manufacturing Industry
Some of the main legal factors in the Manufacturing Industry PESTEL analysis are as follows;
Regulatory Compliance
Manufacturing Firms need to comply with the regulations and policies of different countries. They comprise labor laws, worker safety regulations, minimum wage laws, workplace environment, working hours, and others. Regulatory compliance would help Manufacturing Firms to smoothly perform their business operations without any delays and disruption.
Environmental Factors Affecting Manufacturing Industry
Some of the main environmental factors in the Manufacturing Industry PESTEL analysis are as follows;
Sustainability Initiative
Manufacturing Firms contribute significantly to environmental pollution. They should make a strong commitment to environmental sustainability and take steps like investing in renewable sources of energy, biodegradable packaging, organic products, no animal testing, and others to decrease the carbon emission rate.
Conclusion: Manufacturing Industry PESTLE Analysis |PESTEL Analysis of Manufacturing Industry |External Environmental Analysis of Manufacturing Industry | Strategic Analysis of Manufacturing Industry
After an in-depth study of the pestle analysis of Manufacturing Industry; we have realized that Manufacturing industry plays a key role in the growth of the country. If you are learning about the Manufacturing Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
