Political environment : DHL has access to several threats and opportunities available in the political environment, and risks includes the highly regulated markets in the EU and other countries in which it operates, liberalisation of international trade, international regulations and restrictions, and the introduction of new technologies. he political environment is probably the least predictable of all the e!ternal factors that a business has to operate in. DHL has its head"uarters in Europe, a relatively stable region politically, more than half of the countries in the region are integrated within the European Union which is one of the biggest single markets in the world for trade and investment. #ut despite this, DHL still has to cope with a myriad of issues within the political environment, namely: namel y: bureaucracy, political instability, customs tariffs, tariffs, trade control, and several different laws, some of which are anti$trust law, data protection law, competition regulation law, ta! policies, import restrictions and so on. %ll of these have ripple effect on the operations of DHL no matter the country it operates in. he following are reasons for DHL to be concerned about political environment becau se of the potential to affect its business strategy: •
%n unstable political system can affect market appeal&
•
'overnment always has a duty to protect public interest, and government legislations affects the relationship between the firm and its customers&
•
'overnment actions will always affect the economic environment& and
•
'overnment is a main customer in the consumption of goods and services ()akos, ()akos, *+- *+-
Economic environment : /everal factors within the economic environment affect DHL0s DHL0s operations in any of the countries it operates in. hese include: •
1nflation rate which affects the disposable income of consumers within the econo my, and which reduces the "uantity demanded of available goods and services, a high inflation rate leads to uncompetitive prices of goods and services, and hence poor poo r financial results for organisations.
•
Unemployment levels can affects business operations adversely, a high unemployment rate means that fewer people than normal are working in the economy& hence very few people in the economy can afford to purchase the goods and services that are available in the economy. econo my.
•
Labour costs: % high labour cost translates to high opera tions costs, and this makes a firm0s products to be more e!pensive compared co mpared to others especially imported goods that en2oy government support in their home countries.
•
Low levels of disposable income can adversely affects the "uantity demanded of goods and services in any economy, and at the same time income a large disparity in income levels can favour firms producing in the economy.
•
1nterest rates affect the ability of businesses to borrow money from banks to finance the ir business, this has potential effect on unemployment levels and disposable income as well as a ripple effect back on the economy.
•
)onetary and fiscal policies refer to instruments used by governments to control the amount of money in circulation, while fiscal policies consists of instruments used to redistribute wealth among the population
•
3oreign e!change rates affect the prices of imported goo ds and services and the ability of the local consumers to purchase them, a lower foreign e!change will make prices of imported goods affordable for local consumers while government also needs to watch out for the potential of encouraging dumping of substandard goods (%aker and )cLoughlin, *++, 4ohnson et al., *++5, 6o7ami, *++*.
DHL needs to be concerned with these and other factors to their minute detail in any eco nomy in which it operates because of their potential to derail its strategic plans, these factors control the directions of any economy towards favourable or unfavourable economic environment in which DHL has to operate. Socio-cultural environmental forces: hese refer to the forces and institutions that affect the societal preferences, values and behaviours in a country (6o7ami, *++*. %ccording to 6o7ami (*++*, these include the various cultures which affect behaviour within the country, gender and other connected issues, social lifestyles, domestic structures, levels of education. %ccording to )akos (*+-, one of the most recent socio$cultural factor to e8merge in recent times is the growing impact of social media through networking sites such a s 3acebook, 'oogleplus, 1nstagram. hese are powerful media that can affect the survival of an y business organisation. %ll of these determine the social and cultural structure of any society, especially attitudes, opinions, and interests, and all of these affect the consumption of products and services. 3irms usually take advantage of socio$cultural factors to boost co nsumption, and DHL can target festive periods to encourage families to use its services by sending gifts to families back home, and the emerging %sian market is a potential target for the organisation. Technological environment : he technological environment is an important factor in the environment of a business ('oyal and 'oyal, *++9. %ccording to 'oyal and 'oyal (*++9, issues that a business should be concerned with in the technological environment include 1 infrastructure and its application in e$commerce, e$shipping, energy and consumption c osts, changes in the market and so on. echnology and innovation are about the most dynamic duo in
the world of business today and DHL needs to regularly monitor these factors and how consumers react to the changes that take place in the market. Environmental factors : Environmental factors relate to the impact of greenhouse gases on the atmosphere, geographical location, waste disposal, climatic conditions, energy consumption, people0s attitude towards environment, and so on ()akos, *+-. he impact of transportation on the environment is easily measurable, and pollution caused by increasing human mobility and other activities continues to affect weather and other atmospheric conditions that are important for human sustainability. DHL0s activities has a high impact factor on pollution of atmospheric conditions such as the o7one layer, it then has to be conversant with legislations on pollution, as well as the weather condition of the countries in which it operates and regularly assess how these impact its operations. Legal factors : Legal factors within the environment concern the various legislative frameworks which a firm must consider before accessing a market. 1n highly regulated environments such as the European Union, legal frameworks are constantly changing and organisations that operate in multiple countries such as DHL must keep abreast of these changes. 3or instance, DHL needs to regularly consider that social costs within the society must be weighed against its obligations to comply with ta!ation laws, complying with aircraft noise laws, and e missions control standards, it must be seen to make concerted efforts towards considering these issues always and every time.
