This report is about the macro environmental analysis. Firstly, the macro environment of Spain will be described by means of a DESTEP analysis. Secondly, the Hofstede’s dimensions. After that the opportunities and threats. And as last, the total ranking of Spain.
The environment in which an organization is active in, is constantly changing. These changes affect an organization.
Because of this, it is important to have a view of the environment and respond to changes. By performing a macro environmental analysis, a view of the environment is obtained on a macro level (in scale or scope).
The macro environment includes factors over which an organization cannot utilize influence.
Analyzing the macro environment is part of the external analysis. The external analysis provides insight into the opportunities and threats from the environment of an organization. Together with the internal analysis, the external analysis serves as input for the SWOT analysis (Strenghts, Weaknesses, Opportunities and Threats).
The purpose of the Macro Environment Analysis is to identify possible opportunities and threats that will have impact on the industry as a whole and that are outside the control of the industry.
The DESTEP analysis is a suitable analysis to be applied at the macro level to map the elements that cannot be influenced around a market or environment. By means of the DESTEP analysis, opportunities and threats are mapped out of the environment in which the organization is located and the organization can determine what impact it has.
The DESTEP model concerns demographic, economic, social / cultural, technological, ecological and political / legal factors. These factors cannot be controlled by firms directly. Yet each factor affects any and every business, no matter their industry. CITATION pes17 l 1043 (pestleanalysis, 2017)The DESTEP analysis is detailed below.
Spain has an estimated population of 46.74 million inhabitants. The total surface area of this country is 505.992 square kilometers. Spain is a democracy under a constitutional monarchy and is organized in a parliamentary style of government. It is a developed country and is the 14th largest economy in the world by nominal GDP. Spain has a high rate of people living in urban populations. The two largest cities are Madrid and Barcelona, which have populations of 6,15 million and 5,18 million.
The cost of living is relatively low in Spain compared to other western European countries. Although Spain suffered after the financial crash, the economy started showing signs of recovery in 2015 and the standard of living is now balancing out in accordance with salaries. However, the minimum wage and average salaries are still remaining low.
The gross monthly average salary of Spanish workers in 2017 was 1.889 euros, according to data published by the National Institute of Statistics (INE). The INE report also indicates the median salary in Spain at 1.590 euros in 2017.
The average household net disposable income per capita is USD 23.999 a year, less than the OECD average of USD 33.604 a year. In terms of employment, around 62% of people aged 15 to 64 in Spain have a paid job, below the OECD employment average of 68%. CITATION oec19 l 1043 (oecdbetterlifeindex, 2019)1.3 Economic forcesSpain has suffered from an economic recession for more than 10 years. Only recently has it began showing signs of life. With high unemployment rates and unfavorable loan conditions, Spain is not the best candidate for starting a new business. Despite all of this, Spain is still a popular destination for tourists, thanks to its climate and convenient geographical location within Europe.
Spain has an unemployment rate of 13.5%. The minimum wage in Spain has increased from 736 to 900. Many workers in Spain are paid 14 times a year (with additional payments in July and December), resulting in a minimum salary of 12,600 a year in 2019.
In 2017, Spain exported $296B and imported $332B, resulting in a negative trade balance of $35.7B. In 2017 the GDP of Spain was $1.31T and its GDP per capita was $38k. CITATION oec17 l 1043 (oec.world, 2017) CITATION exp19 l 1043 (expatica, 2019)
When it comes to the society and culture, Spain is very unique. Many of the countries inhabitants follow a workday schedule with long, lunchtime breaks and late bedtimes. The Spanish are welcoming people and the country is known for its exotic beaches, lots of sunshine, tapas, bullfighting, art, flamenco and dancing. When it comes to education, 59% of adults aged 25-64 have completed upper secondary education, much lower than the OECD average of 78%.
The main religion in the country is Catholicism, around 67,4% of the Spanish population. In addition to the more common Catholic holidays, such as Christmas and Easter, Spaniards also celebrate Three Kings in the month of January. CITATION Wor18 l 1043 (Worldatlas, 2018)1.5 Technological forcesTechnologically, Spain is at the same level with much of the rest of Europe. Advanced computers and mobile phones are spread widely, with powerful cellular networks working across the country. Spain has even its own high-speed train system. Also, the level of healthcare is acceptable, but not as impressive as in other European countries.
Spain has a good infrastructure, as with many other European countries, Spain has a relatively high-quality infrastructure in terms of energy, transportation, and telecommunications. There are well-built roads, plenty of cell towers to ensure strong mobile signals across the country, well built roads and high-speed train systems in most parts of the country. This results in a high quality of living and opens Spain up to new development.
Spain is fast becoming a leader in innovation and generating advanced solutions in the industries of aerospace, renewable energies, water treatment, rail, biotechnology, industrial machinery and civil engineering. The country is determined to deepen and intensify its productive specialization in industries that depend on technology and innovation. CITATION ice l 1043 (icex.technologyreview, sd)1.6 Ecological forcesThe climate in Spain is mainly Mediterranean. In particular, winters are mild and summers are hot in the coastal regions. The fine weather and climate attracts many tourists. One of Spain’s biggest strengths is its popularity as a tourist destination. With rich culture, beautiful beaches, and a warm climate, Spain is an attractive tourist destination for travelers from around the world.
The legal environment in Spain is what you would expect of any European country. With strict copyright and data protection laws, the country has laws in place for the digital era. Spain is a highly bureaucratic country, which means there are a fair number of legal gaps to jump through when investing in the country or opening a local business.
Spain is a member of the European Union. Spain has had a high fiscal deficit, meaning that the government spends more than it earns, which has led to a growing sovereign debt. Unfortunately, there is also a lot of corruption in the country. Several high-profile examples of corruption have been identified in the last five years alone.
Hofstede’s DimensionsThe dimensions describe the effects of a society’s culture on the values ??of its members and how these values relate to behaviour. It also describes the relationship between these values and behavior, with the help of a structure based on factor analysis. In other words, this theory studies aspects of culture and provides it a rating on a comparison scale. Knowledge of the dimensions can help a manager to understand and successfully enter the international business market.
Below is a graph with the six dimensions of Hofstede for The Netherlands and Spain. Each dimension is separated in two countries with each an own score. Only the first four are discussed in this report.
This dimension explains the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.
The Netherlands scores low on this dimension (score of 38) which means that the following characterizes the Dutch style: being independent, hierarchy for convenience only, equal rights, superiors accessible, coaching leader, management facilitates and empowers. Power is decentralized and managers count on the experience of their team members. Employees expect to be consulted. Communication is direct and participative. There is a democratic relationship in the Netherlands.
Spain scores 57 on this dimension, which means that Spain has a hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. It also common for the most powerful positions to have some benefits that other people do not have. Employees expect their boss to control them and if the boss shows lack of interest to an employee it means that they are not relevant to the organization. Negative feedback from employees is not taken lightly so it can be hard for employees to confront their boss with an issue they have. The managers give the tasks to the employees. Also, at school and at home are parents and teachers respected.
From my own experience at work, I can say that the boss of Solera is very gentle and sociable. He barely orders his employees. He is very emphatic and cares for his employers. The employees respect the boss and boss also respects the employees. The boss brings a plate of desserts and pastries to employees almost every day. He buys it with his own income. This is very rare at work. Because normally the employees have to bring their own food. He is also very open to feedback. The personality of the boss plays also a huge part in power distance.
The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these.
The Netherlands scores 53 on this dimension and shows a slight preference for avoiding uncertainty. Countries showing a high uncertainty avoidance maintain rules of belief and behavior. They are also intolerant of unusual behaviour and ideas. In these cultures, there is a need for rules.
If there is a dimension that defines Spain very clearly, it is uncertainty avoidance. Spain scores 86 on this dimension. Spaniards like to have rules for everything. But they are also obliged to avoid rules and laws that make life more difficult. Confrontation is avoided, because it causes stress. There is great concern for changing and undefined situations. They do not like to adapt to something or situations. Laws are appreciated and planning is very important. These countries do not like surprises such as a new product on the existing market.
The main point of this dimension is whether people prefer being left alone to look after themselves or want to remain in a closely group and collective relationships. In other words, it has to do with whether people?s self-image is defined in terms of “I” or “We”. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘groups’ that take care of them in exchange for loyalty.
The Netherlands, with the high score of 80 is an individualist society. This means there is a high preference for a social distant in which individuals are expected to take care of themselves and their families only.
Spain, in comparison with the rest of the European countries is collectivist, with a score of 51. In Spain there is a “we” culture. The Spanish population lives and shares
a lot together. Teamwork is considered as something totally natural. Instead of the strong motivation from management, employees are used to work together. Families and relation groups are meant to look after one another.
Masculinity, a high score on this dimension indicates that the society will be driven by competition, heroism, achievement and success. In contrary to femininity, a low score on this dimension means that the dominant values in society are caring for others and quality of life. Femininity represents a preference for modesty, cooperation, quality of life and caring for the weak.
The Netherlands scores 14 on this dimension and is therefore a feminine society. An effective manager is supportive to his people and decision making is achieved through involvement. Managers strive for consensus and people value equality, solidarity and quality in their working lives. Conflicts are resolved by compromise and negotiation and Dutch are known for their long discussions until consensus has been reached.
Spain scores 42 on this dimension and is a country where the key word is consensus. So excessive competitiveness is not appreciated. Spanish children are educated in search of harmony, refusing to take sides or standing out. There is a concern for weak or needy people that generate a natural current of sympathy. Regarding management, managers like to consult their employees to know their opinions and, according to it, make their decisions. In politics, it is desirable to have participation of all the minorities, trying to avoid the dominant presence of just one winning party. It is the country opposite to ‘the winner takes it all’. CITATION hof l 1043 (hofstede-insights, sd)Opportunities and threats
Based on the DESTEP analysis, a number of opportunities and threats will be identified for Solera and the country.
Opportunities are external factors that may contribute to your organization and can build up the strength of an organization.
Threats are potential problems or risks caused by external factors that your organization may face.
Renewable energy: with long coastlines, strong ocean breezes and plenty of sunshine. Spain appears to be an ideal candidate for adopting various sources of renewable energy. Large portions of currently unused coastlines could become tidal power stations, while windmills and solar panels could be used across the country for a cheap and sustainable source of energy. While this would be extremely beneficial from an environmental perspective, it would also allow Spain to gradually reduce its dependence on fossil fuels, leaving future generations in a powerful place.
Family business: Solera is a family business. Family members are willing to take several different tasks outside of their formal jobs in order to ensure the success of the company. This long-term commitment leads to additional benefits, such as a better understanding of the industry, organization and job, stronger customer relationships and more effective sales and marketing. Family members are more motivated and have a long-term relation at work, this builds up the strength of the organization.
Technological developments: Spain is among the world leaders in technological developments. This makes sure that companies can execute processes faster. The country is determined to deepen and intensify its productive specialization in industries that depend on technology and innovation.
Corruption and tax evasion: tackling corruption would ensure that government funds are spent on furthering the country’s development, while reducing tax evasion would simply give the government more to spend.
High unemployment rate: despite the fact that the economy is growing, there has been a high unemployment rate for years. The government has to provide more unemployment benefits compared to other European countries. As a result, the purchasing power of people on such benefits is limited, causing them to spend less.
Reduced exports to the UK. Brexit: with the United Kingdom’s upcoming departure from the European Union. Spain could see serious consequences. It’s still very unclear how Brexit will unfold, but if it were to limit the travel of British citizens in the European Union, that could have a serious impact on Spain’s tourism industry and expatriate communities. The United Kingdom is Spain’s fifth largest export destination. A change in trade regulations could reduce Spain’s income from these exports.
RankingSpain has an overall score of 6,3. That means that Spain is #20 in Overall Rankings.
This is based on a set of 65 attributes. The attributes were grouped into nine sub-rankings: Adventure, citizenship, cultural influence, entrepreneurship, heritage, movers, open for business, power and quality of life.
In general, Spaniards are satisfied with their lives. When asked to rate their general satisfaction with life on a scale from 0 to 10, the Spanish gave it a 6.3 grade on average, broadly in line with the OECD average of 6.5.
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