PESTEL Analysis of Eli Lilly
PESTEL analysis of Eli Lilly is ideal for the company to figure out its market position and other external factors. This strategic planning tool stands for Political, Economic, Social, Technological, Environmental, and Legal factors. The company’s overall profitability and market share are dependent on these factors. They can impact the business operations of Eli Lilly. A slight change in these factors will also deeply hurt the company and its competitors. Eli Lilly should consider this a useful tool when it comes to shaping strategy and getting a competitive advantage.
PESTEL analysis provides extensive information about operational difficulties Eli Lilly will encounter in the prevalent macro environment aside from competitive powers. For instance, even if an industry has a strong growth trajectory and high profitability, Eli Lilly won’t benefit if the industry is located in an unstable political environment.
Eli Lilly is a giant multinational pharmaceutical company in the United States. It is currently headquartered in Indianapolis, Indiana. It was established in 1876 and has offices in 18+ nations. In 2022, its total revenue was $28.45 billion. To date, they have employed over 39,000 workers. This is a brief introduction about the company; now, let’s get started with the PESTEL analysis of Eli Lilly.
Political Factors Impacting Eli Lilly
Eli Lilly’s long-term profitability in a particular nation or market is greatly influenced by political factors, which are a significant factor in this determination. Eli Lilly operates in the Drug Manufacturers – A major industry in more than a dozen countries, where it is subject to risks associated with various political systems. Diversifying the systematic risks of the political culture is necessary to succeed in such a dynamic industry as drug manufacturers, which spans many nations. Before making an investment in a particular sector or market, Eli Lilly should carefully examine the following political factors:
- Overtime and minimum wage legislation.
- Labeling of products.
- Political stability in the country.
- The danger of military invasion.
- Impact of bureaucracy.
- Tariffs and trade laws.
- Favorite trading partners.
- Incentives and tax rates.
- Anti-trust laws.
- Intellectual property rights.
- Essential employee benefits.
- Work week laws.
- Contract enforcement.
- Legal framework.
- Corruption level in the country.
- Pricing regulations.
Economic Factors Impacting Eli Lilly
Macro-environmental factors, such as savings, inflation, foreign exchange, economic cycle, and interest rates, determine an economy’s cumulative demand and investment. While micro-environmental elements like industry standards have an impact on the company’s competitive benefit. In order to predict the growth trajectory of the firm, Eli Lilly can use economic factors related to the nation, such as inflation and growth rates, as well as consumer spending. Eli Lilly should take into account the following economic factors when performing a PESTEL analysis of Eli Lilly:
- Skill level of the population in the pharma and healthcare sector.
- Economic growth rate.
- Interest rate.
- Unemployment rate.
- Inflation rate.
- Flexible income.
- Education level.
- Combined advantages.
- Business cycles such as recession, prosperity, and recovery.
- Productivity and labor costs.
- Effectiveness of financial markets.
- Quality of infrastructure in the pharma industry.
- Foreign exchange rate.
- The economic system and its stability.
- The intervention of the government.
Social Factors Impacting Eli Lilly
The culture and the way of life are two important factors in this PESTEL analysis of Eli Lilly. It greatly impacts the business operations and the company’s overall profitability. The company should make a solid brand message in order to attract customers of its segment. Moreover, they should consider the customers’ common attitudes, beliefs, and behaviors. Eli Lilly should analyze the following social factors:
- Leisure interests.
- Literacy rate in the country and in the healthcare sector.
- Attitudes toward environmental consciousness and health.
- Entrepreneurial efforts.
- Nature of the people.
- Skill level of the people.
- The power structure in the society.
- Gender roles.
- Social events.
- Class structure in society.
Technological Factors Impacting Eli Lilly
A firm like Eli Lilly must conduct a technological analysis of its company to determine why they require technological investments. If the company doesn’t implement or invest in new technologies, its competitors will surely hurt its market standing and profitability. Various industries are being unsettled by technology at an accelerated speed. The transportation sector is an excellent example of this. Uber and Lyft have completely disrupted the business of traditional taxis by introducing innovation in the form of technology. You don’t need to bargain because you can adjust your fare using your smartphone to book a ride. Moreover, Google and Tesla are also trying to bring technological advancement to the transportation sector by manufacturing electric cars. Eli Lilly should consider the following technical factors:
- Technical diffusion rate in the pharma and healthcare sector.
- Cost structure impacting the company’s technology.
- Supply chain impact on the company.
- Impact of technology on products.
- Newest technological advancements made by the company’s competitors.
Environmental Factors Impacting Eli Lilly
States can have different liability and environmental regulations even within the same nation. For instance, in the United States, Florida and Texas have differing responsibility provisions in the event of accidents or environmental catastrophes. Similarly, several European nations offer substantial tax incentives to businesses engaged in the green energy industry. Various industries have distinct standards or ethical standards, which might have an effect on an organization’s profitability there.
The firm should thoroughly assess the environmental criteria necessary to operate in those areas before expanding new markets or opening a new business in an existing market. Among the environmental aspects a company should think about in advance are the following:
- Climate change.
- Attitudes toward renewable energy.
- Endangered species.
- Regulations regarding environmental pollution.
- Waste management.
- Attitudes toward eco-friendly products.
- Water pollution.
- Air pollution.
Legal Factors Impacting Eli Lilly
Many nations’ institutions and legal systems must be sufficiently powerful to safeguard an organization’s IPRs. Before entering these markets, a company should carefully consider its options because doing so might result in losing its secret competitive advantage. When approaching a new market, Eli Lilly’s leadership should take specific legal considerations into account:
- Anti-trust laws.
- Discriminations law.
- Data protection law.
- Regulations regarding health and safety.
- Copyrights, patents, and IPR.
- Employment laws.
- Customer protection law.
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