PESTEL analysis of Norway (Norway country analysis)
This detailed PESTEL analysis of Norway aims to address some of the political, economic, social, technological, environmental, and legal factors that affect Norway today. Norway is one of the richest countries in the world by GDP per capita. It is officially known as the Kingdom of Norway.
Political factors affecting Norway
Norway is a constitutional monarchy and parliamentary democracy. It is the most democratic country in the world as evidenced from its great scoring in the criteria of Democracy Index, i.e. electoral process and pluralism, civil liberties, the functioning of government, political participation, and political culture (The Economist, 2020). The monarch retains executive power, though the power is mostly ceremonial due to the parliamentary system in the country where the Prime Minister exercises the executive power.
Norway maintains very good foreign relations with a very good number of countries in the world. It has embassies in 82 countries, while 6o countries have their embassies in Norway. It has, in recent years, played an important role in conflict mediation and peace processes in the Middle East, and South Asia (BBC, 2018). It is a founding member of the UN, the NATO, the Council of Europe, and the European Free Trade Association (EFTA).
Norway is a very modern and politically stable country which provides a business-conducive environment. It is also one of the least corrupt countries in the world. Crime rates are extremely low making it a very safe place to live in and do business. However, the rise of anti-immigration sentiments and right-wing extremism has been a cause of concern.
Economic factors affecting Norway
The next element to address in the PESTEL analysis of Norway is the economic environment. Norway is one of the richest economies in the world in terms of purchasing power parity (PPP). According to the World Bank (cited in Trading Economics, 2020), the GDP in Norway in 2019 was worth $450 billion. However, its economy took a huge hit in the first quarter of 2020 due to recent pandemic outbreak. Many analysts forecast that this decline is likely to affect the economy for many years to come (Solsvik and Fouche, 2020).
Oil and gas, energy, maritime and the seafood are some of the world class industries in Norway. Norway is very open to foreign direct investment as evidenced from the presence of 6000 foreign-owned limited companies and their branch offices in and around the country. In fact, these foreign-owned companies cater for 20% of the country’s employment (Innovation Norway, 2020).
Corporate income tax (CIT) in Norway is generally set at a rate of 22%, while companies in the financial sector are required to pay tax at a rate of 25%. Unemployment rate is generally low in the country; however, it went really high in March 2020 due to the economic shutdown imposed by the global pandemic (Holter, 2020).
Social factors affecting Norway
Norway is one of the happiest countries in the world where the life expectancy for men is 79 years, while 83 years for women. The major language is Norwegian, while Christianity is the major religion (BBC, 2018). Norwegians are well-known for their pursuit of happiness through a combination of nature, companionship, and cosiness that promote personal well-being (Allan, 2019). As of June 2020, the total population of the country is approximately 5.4 million (Worldometer, 2020).
Norway is a friendly and one of the safest countries in the world with very low crime rates. It is also a modern country; however, it has maintained many of its traditions. Outdoor activities are central to the lives of the Norwegians; however, they are also very good at resting and relaxation. Many Norwegians love staycations and travelling abroad. The country has seen in recent years a rise in the opening of new restaurants catering for both domestic and global cuisines. However, some analysts argue that the rich is getting richer in Norway leaving many people poor. Other notable socio-economic challenges are income inequality and poor living conditions for many.
Technological factors affecting Norway
Norway has been trying to shift its focus from oil, gas and fishing to technology. In fact, it aims to become the world’s next big tech hub. Its recent success in IT as evidenced from the likes of Kahoot, Vivaldi, and Opera Software has been great. Almost all Norwegians have access to the Internet and use it on a regular basis. The government has been heavily focused on technology, and many youngsters now consider a career in it. However, it is worth mentioning that the country needs to walk a long way to make a radical shift from its traditional industries to the digital world.
Facebook is the most popular social media platform Norway. Other notable networks are Twitter, Pinterest, Instagram, and YouTube. According to Tankovska (2019) 93% of respondents use the Internet for email communications, while 94% use it for banking. However, only 32% use it for selling goods and services.
Environmental factors affecting Norway
Norway is one of the most beautiful countries in the world. It is a land of hundreds of thousands of lakes and has 24 hours of visible sun during the summer. Its stunning cities, ancient forests, mountains, waterfalls, scenic valleys and villages, and majestic landmarks such as fjords mesmerise millions of tourists every year.
However, Norway faces some environmental challenges as well e.g. climate change, loss of biodiversity, and local air pollution. It is worth mentioning that the country has taken a number of initiatives to battle climate change and aims to be the first country in the world to become ‘carbon neutral’ and cut net greenhouse gas emissions to zero by 2050.
Legal factors affecting Norway
The last element to address in the PESTEL analysis of Norway is the legal landscape of the country. In Norway, the Working Environment Act regulates the relationship between employees and employers (NHO, 2020). According to this Act, the norm for weekly working hours is 40 hours and employees have the right to flexible working hours if managed appropriately. According to the Holiday Act, the yearly paid holiday entitlement for all employees is four weeks and one day. Employees can also have sick leave and leave due to pregnancy, childbirth, and adoption though some criteria must be met.
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Last update: 10 June 2020
Allan, D. (2019) Why are Norwegians so happy? In a word: ‘koselig’, available at: https://edition.cnn.com/2019/04/30/health/norway-koselig-hygge-cozy-nature-chasing-life-wisdom-project/index.html (accessed 09 June 2020)
BBC (2018) Norway country profile, available at: https://www.bbc.co.uk/news/world-europe-17743896 (accessed 01 June 2020)
Holter, M. (2020) After 350% Jobless Jump, Norway Unemployment Is Worst Since WWII, available at: https://www.bloomberg.com/news/articles/2020-03-24/norway-jobless-rate-soars-to-highest-since-wwii-as-crisis-hits (accessed 05 June 2020)
Innovation Norway (2020) Invest in Norway, available at: https://www.innovasjonnorge.no/en/start-page/invest-in-norway/why-norway1/ (accessed 09 June 2020)
NHO (2020) Basics of Norwegian Labour Law, available at: https://www.nho.no/en/english/articles/basic-labour-law/#:~:text=According%20to%20the%20Working%20Environment,is%2037.5%20hours%20per%20week.&text=Employees%20may%20have%20the%20right,health%2C%20social%20or%20welfare%20reasons. (accessed 09 June 2020)
Solsvik, T., and Fouche, G., (2020) UPDATE 3-Norway economy takes huge hit from coronavirus outbreak, available at: https://www.reuters.com/article/health-coronavirus-norway-economy/update-3-norway-economy-takes-huge-hit-from-coronavirus-outbreak-idUSL5N2CC1GO (accessed 05 June 2020)
Tankovska, H. (2019) Internet usage in Norway in 2019, by activity, available at: https://www.statista.com/st atistics/568401/internet-usage-in-norway-by-activity/ (accessed 02 June 2020)
The Economist (2020) Democracy Index 2019, available at: https://www.eiu.com/topic/democracy-index (accessed 08 June 2020)
Trading Economics (2020) Norway GDP, available at: https://tradingeconomics.com/norway/gdp (accessed 07 June 2020)
Worldometer (2020) Norway population, available at: https://www.worldometers.info/world-population/norway-population/ (accessed 08 June 2020)
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Author: Joe David
Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.