Analysing the market: PESTLE analysis on the United States and New York

To analyze the macro environment, we decided to conduct a PESTLE analysis. We focused more on issues that have a relevance for this specific entry, with points drawn on both a national and city specific levels.

Political

• Stable political environment and government intervention tends to be quite minimal
• The political environment is quite different from the one of Finland, e.g. in terms of lobbying
• The taxing system is complex, with various taxes with very differing principles put in place. In the state of New York, “the combined sales and use tax rate equals the state rate (currently 4%) plus any local tax rate imposed by a city, county, or school district” (The New York State Department of Taxation and Finance, 2013)
• The United States and members of the European Union (EU) already practice trade very actively and operation is made efficient. In addition, The EU and the United States are currently negotiating on a Transatlantic Trade and Investment Partnership, also known as TTIP, which would remove “trade barriers in a wide range of economic sectors to make it easier to buy and sell goods and services between the EU and the US” (European Commission, 2013).

Economic

• The financial crisis has created insecurity in the behavior patterns of consumers, but otherwise the economic environment is relatively stable and the United States is one of the largest countries in the world in terms of national economy
• The dollar is recognized as a “global currency”
• The Federal Reserve is aiming for an inflation rate of two percent and actually “implements monetary policy to help maintain an inflation rate of 2 percent over the medium term” (Board of Governors of the Federal Reserve System, 2013)
• The metropolitan area of New York is the second-largest city in the world by GDP (McKinsey, 2012)

Social

• The United States as a whole, as well as New York City, are very high in cultural diversity
• Income inequality is high
• The median household income in New York is $56,951 (U.S. Census Bureau, 2013)

Technological

• The United States is one of the most technologically advanced countries in the world
• New York State has a population of over 19 million, of whom over 16 million use the internet

Legal

• Trademark and patent protection is an important issue to recognize
• There are various legal issues that companies might have to assess, like product liability

Environment

• The United States has a strong regulatory environment, concerning both consumers and companies
• New York can be considered as one of the global centers for fashion
• New York City is located rather north and the climate is quite cold, with yearly temperatures ranging on average from -3 to +29 Celsius degrees. On average, there are six months with a temperature drop to below 20 Celsius degrees (The Weather Channel, 1995-2012).

References:

European Commission (2013). Transatlantic Trade and Investment Partnership (TTIP) [website] (November 21, 2013). Available at: http://ec.europa.eu/trade/policy/in-focus/ttip/. [November 27, 2013].

(Board of Governors of the Federal Reserve System, 2013). Why does the Federal Reserve aim for 2 percent inflation over time? [website] (November 26, 2013). Available at: http://www.federalreserve.gov/faqs/economy_14400.htm. [November 27, 2013].

McKinsey Global Institute (2012) Urban America: US cities in the global economy, April 2012. McKinsey & Company.

The New York State Department of Taxation and Finance (2013). Sales tax rates and identifying the correct local taxing jurisdiction [website] (November 4, 2013). Available at: http://www.tax.ny.gov/bus/st/sales_tax_rates.htm. [November 27, 2013].

The Weather Channel (1995-2012). Monthly Weather for New York [website] (1995-2012). Available at: http://www.weather.com/weather/wxclimatology/monthly/graph/USNY0996. [November 27, 2013].

U.S. Census Bureau (2013). State & County QuickFacts [website] (June 27, 2013). Available at: http://quickfacts.census.gov/qfd/states/36000.html). [November 27, 2013].