PESTEL analysis of the USA
This PESTEL analysis of the USA aims to address some of the political, economic, social, technological, environmental, and legal issues concerning the USA. The United States of America (USA) is commonly known as the United States (U.S.). It is an economic and political superpower. In terms of nominal GDP, it is the largest economy in the world.
The USA contributed immensely to the founding and development of institutions such as the United Nations, World Bank, and international Monetary Fund. It is a highly developed country with a great reputation for its infrastructural and technological brilliance.
Political factors affecting the USA
The USA is the second largest democracy in the world. The president is the head of the country and is elected for a four-year term. Elections held in the USA are usually considered fair and transparent. The country enjoys a stable political climate, even though there have been some challenges recently. It also has an enormous influence over the political dynamics of many countries around the world. However, the USA faces international criticism for some of its interventionist policies in some parts of the world.
The USA advocates and promotes democracy around the world. With a stable political environment, advanced infrastructure, and technology, the USA positions itself as a great destination for foreign direct investment (FDI). Consequently, the country has been the first choice for many multinational companies for foreign direct investment for a long time. However, countries such as China, India, Brazil, Turkey, Nigeria, South Africa, and many others came forward as contenders for foreign direct investment.
Economic factors affecting the USA
The next element to address in the PESTEL analysis of the USA is the country’s economic environment. The USA is the largest economy in the world in terms of nominal GDP. It is a country from where companies such as Coca Cola, McDonald’s, Subway, Microsoft, Apple, Facebook, Google, and many others are shaping and leading the socio-economic discussions of the world. However, the recession in 2009 badly affected the economy of the USA. Many companies collapsed and unemployment rates increased to an alarming point.
Things changed in the last few years. Unemployment fell in 2015, and income levels improved in 2016 (Amadeo, 2017). However, it is worth mentioning that labour is not cheap in the USA, particularly when compared to that in China, India, and Mexico. Availability of cheap labour has encouraged many US firms to outsource many of their business activities around the world.
The global economic landscape is changing very rapidly which is a challenge for the USA. There is no doubt that the country is an economic superpower and world leader. However, it may turn out to be the 3rd in the global ranking by 2050 in terms of gross domestic product by purchasing power parity (Martin, 2017).
It is worth mentioning that that there is a widespread fear that the US economy may slide into recession in late 2019 as the country’s stock markets have already dropped sharply. Many analysts believe that US-China trade war, US-Iran standoff, Brexit and geopolitical uncertainties around the world may cause recession not only in the USA but also in many other countries.
Social factors affecting the USA
The USA is the third most populous country in the world with a total population of approximately 327.2 million as of 2018. It sees one birth in every 8 seconds, and one death in every 11 seconds (US Census Bureau, 2017). While it is not in the top 20 list of aging population in the world, still the USA has a big aging population which can cause problems, particularly in the supply of labour.
The USA is a very diverse country. By 2020 almost 1 in 3 Americans will have African, Asian, Latino, or Native American ancestry. The US education system is one of the best in the world; so is the health care system. However, health care is not usually free and certainly not cheap for many people.
People are generally health conscious; however, fast food culture has contributed to obesity and other illnesses in the country. A majority of the population has a liberal mindset; however, the country witnessed racial tensions recently. Socio economic mobility in the USA increased from 1950 to 1980; however, according to some studies, there has been a decline since 1980. Socioeconomic mobility refers to the upward or downward movement of people from one social class or economic level to another.
Technological factors affecting the USA
The USA is the global leader in science and technology. Americans have a longstanding fascination for technology, and companies such as Apple, Microsoft, Google, Facebook, and many others have addressed the technological needs of the Americans and the people around the world. And in doing so, they have become the global leaders in their respective field.
The USA has been at the forefront for adapting and applying technologies in a wide variety of fields. Technologies have changed the ways many things are done. Many jobs have been transferred from the USA to other countries and production facilities have been relocated. While this has helped companies reduce their production costs, it has also made many Americans upset. The rate of technological innovation and change is extremely rapid in the USA. However, the country faces strong challenges from a number of countries e.g. China, South Korea, and India.
Environmental factors affecting the USA
The USA has an extremely diverse geography, climate, and wildlife. This diversity coupled with other factors has been a driving force to draw millions of tourists to the country. 75 million visitors from around the world traveled to the United States in 2014 (SHAREAMERICA, 2015). Likewise, 79.62 million international visitors came to the U.S. in 2018 (Lock, 2019). Canada, Mexico, United Kingdom, Japan, Brazil, & China are the top six countries sending tourists to the USA.
However, the USA faces some of the toughest weather conditions in the world. The country has sustained 218 weather and climate disasters since 1980. In 2017 alone (as of October 6), there have been 15 weather and climate disasters with losses exceeding $1 billion each across the United States (NCEI, 2017). Wildfires in California in 2019 have also been devastating. Apart from financial damages, these disasters also cause disruption to everyday life in the most technologically developed country in the world.
Legal factors affecting the USA
The last element to address in this PESTEL analysis of the USA is the legal environment. Though a detailed discussion on the legal environment of the USA is beyond the scope of this article, the article addresses some of the key areas in brief. Each state in the USA has its own government structure and legal scheme. Businesses come under the regulatory environment of the state in which they operate. The country upholds equal treatment of nationals and foreigners. Expatriate employees can expect an unbiased trial from the judicial system. The USA also offers a strong legal system to protect Intellectual Property Rights.
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Last update: 09 November 2019
Lock, S. (2019) Number of inbound international visitors to the United States from 2011 to 2018 (in millions), available at: https://www.statista.com/statistics/214686/number-of-international-visitors-to-the-us/ (accessed 06 September 2019)
Martin, W. (2017) These will be the 32 most powerful economies in the world by 2050, available at http://www.independent.co.uk/news/business/these-will-be-the-32-most-powerful-economies-in-the-world-by-2050-a7587401.html (Accessed 12 November 2017)
University of Central Florida (2017) Business Research — Industry Analysis, available at http://guides.ucf.edu/industryanalysis/PESTLE (Accessed 12 November 2017)
SHAREAMERICA (2015) Destination USA: 75 million international guests visited in 2014, available at https://share.america.gov/75-million-tourists-visited-us-2014/ (Accessed 12 November 2017)
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Author: Jo David
Jo David has years of 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.