PESTEL Analysis of Nepal

• Presented by:Amish DhungelBrada NeupaneBiraj AryalUnnati UpadhayaPrema SunuwarSuresh Mishra

PESTEL Analysis

• PESTEL analysis describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. (wiki)

• The relevance of PESTEL model for a country analysis is to audit its contemporary environment and assess potential changes and prepare accordingly so that the country will be better positioned than its competitors to respond to changes.

Political Environment Analysis of Nepal

• Presented by: Amish Dhungel

Political Environment Analysis of Nepal

• Federal Democratic Republic of Nepal• Government: Parliamentary republic• Absolute Monarchy: • 1726-1950 (Shah Dynasty, unification)• Rana rule

• Democracy in Nepal: • Tri-party agreement in New Delhi (1950), Dawn of Democracy• End of democratic practice in 1960 by King Mahendra• Constitutional monarchy installed on 1990 by King Birendra • Maoist insurgency from 1996 to install Republic in Nepal• Royal Massacre in 2001• Dismissal of democratic experiment in 2005 by King Gyanendra• 2006 April revolution jointly by Seven party coalition together with Maoist, reinstate of

Parliament • May 8, 2008 Nepal was declared as Federal Democratic Republic

Political Environment Analysis of Nepal

• Was never colonized.• Instable government. No government since 1991 have

survived for more than two years.• 23 governments over last 23 years. • Ease of doing business: 105 (World Bank)• Corruption Perception Index: 116/176(Transparency

International)• Women representation in Parliament: 33.33%

Political Environment Analysis of Nepal

• Executive power vested in government headed by Prime minister.

• Head of state is President.• Legislative power is vested in Government and the

parliament.• Independent judiciary.• Nepali congress (socialist-democracy), UML, UCPN-

Maoist as major political parties. 139 political parties registered for 2nd CA election

Political Environment Analysis of Nepal

• Commission of Investigation for Abuse of Authority (CIAA) in practice since 2007

Things are Changing…

• Constitution drafting on its way• Government strong commitment for optimum growth of national production • More liberal economic policies in line to free market• Fine-tuning of monetary policy• Recognized the role of private sector• Government investment only in infrastructure• One window policy for FDI via Investment Board• Trade policies promoting exports and reducing of trade imbalance• Quantitative restriction and import licensing system abolished• Simplified export procedures• Rapid financial reforms, enabling JV Banks etc

Socio-Cultural Environment Analysis of Nepal

• Area: 147,181 sq. km. ; world's 93rd largest country by land mass and the 41st most populous country.

• Located in the Himalayas and bordered to the north by of China, and to the south, east, and west by the Republic of India.

Kathmandu is the nation's capital and largest metropolis. Renowned for its splendid Himalayas.

Demographic status

Total Population: 26,494,504 (2011 census) Gender distribution:

Male Composition: 49%Female Composition: 51%

Age groups: 0-14 (39.35%15-59 (54.15%

60+ (6.5%) Geographical regions: Mountain: 6.73% Hill: 43%

Terai: 50.27% Population growth rate: 1.35

• Religion: Hindu 81%, Buddhist 9%, Muslim 4.4%, Kirat 3.1%, Christian 1.4%, other 0.5%, unspecified 0.2%

• 123 mother tongues, Nepali being the national language is spoken by 44.6%.

• Literacy rate:75.10%• Staple food: Rice, vegetables, lentils and pickles, dhido

( traditional food)

Class & caste structure

Deep rooted caste system still prevailing in some parts of country• Upper class• Middle class• Lower class

• Brahmin• Chhetri • Baisya and,• Sudra

• Nepal is a melting pot of many races and tribes.• There are around 101 ethnic and caste groups.

• The ethno-cultural groups maintain their unique life style, language, customs, and rituals, food habits, dresses, jewelry or ornaments and festivals.

• The culture of Nepal is a assemblage of music, architecture, religion and literature.

• Music is associated with every event in Nepal, then be it birth, marriage, festivals or national events. 

• Business practices are influenced by traditional values.• Any business that is conducted against the cultural values may not

sustain.• Family patronage of business is wide spread.• Modernization and growth in information technology are helping

to break cultural barriers in Nepal.• With the growing literacy rate traditional way of doing business is

being gradually replaced. Huge impact of tradition and culture in businesses. (eg. beef

products are not allowed). Tourism industry is highly influenced by socio structure, culture

and traditions.

• 89.2 percent are reported to be living in their own dwelling units and 9.2 percent in rented dwellings

• Majority (68.4 percent) of the households used wood as fuel for cooking. Liquefied Petroleum Gas (LPG) use was 12.3 percent

• (25.4 percent) of households has a modern flushing toilet and 23.4 percent have an ordinary toilet.

• (28.3) percent have a mobile phone, 9.8 percent have a fixed line telephone and 3.1 percent have a computer

Socio-Cultural facts

• Median age of country's population: 21.6 years• People of all ages living with HIV (thousands) 2012,

estimate 49,000• Crude fertility rate: 2.4• Urbanized Population: 17.3 %• School enrollment rate: 135% (highest in South Asia)• Life expectancy at birth: 68 (highest in South Asia)

TECHNOLOGICAL ENVIRONMENT Analysis of Nepal

A SHORT HISTORY OF SCIENCE AND TECHNOLOGY

• Modern science entered with the introduction of intermediate science education in Tri Chandra College in 1919.

• Bachelors of science : Tri Chandra College, 1948• Masters of Science : Tribhuwan University, 1965• Institutions of Medicines, Engineering, Forestry,

Agriculture :TU, 1973• The 6th Five Year Plan(1980-1985), linked science and

technology activities with economic development• National Council of Science and Technology (NCST),

1976, now dismantled

• Foreign Investment and Technology Transfer Act, 1992 (FITTA):

FITTA governs all matters relating to foreign investment and technology transfer. This act states provision regarding settlement of disputes related to investment among the stakeholders.

It also clarifies the potential are where foreign investment and technology transfer can be made. Similarly it also states mentions the area where foreign involvement is restricted. Like: cottage industry, arms industries, motion pictures business, security printing etc.

• Science and Technology Policy, 2005It focuses on Infrastructure development, human resource development, R & D, etc. Furthermore it vision to build Nepal as a developed, dynamic and prosperous state by raising the living standards through the appropriate development and use of science and technology.

• National Policy on Technical Education and Vocational Education, 1999

• Information Technology Policy, 2002

• Research Centre for Applied Science and Technology (RECAST), 1977

• Nepal Academy of Science and Technology (NAST), 1982• Ministry of Science and Technology, 1995• B.P. Koirala Institute of Health Science• National Academy of Medical Sciences, Bir Hospital• National Agriculture Research Centre, 1991• Department of Forest Survey and Research, 1963• Department of Irrigation, Hydrology and Meteorology, 1967• Department of Plant Resources, 1957

TECHNOLOGY OF NEPAL AT GLANCE• RADIO Government Owned FM- 1 (Radio Nepal) Private Owned FM- 50• NEWSPAPER Number of National Daily- 14

• Government- Gorkhapatra and The Rising Nepal• Private- Kantipur Daily, THT, TKP•Number of Weekly Newspaper-15

• TELEVISION Commenced in 1985 with Nepal Television Government- 2 (Nepali TV and NTV Plus) Private- 20 (Most preferred are Kantipur, Image Channel, Avenues)

• TELECOMMUNICATION As per 15th July 2013 Population-26,494,504 User population-21,332,275 (80.51%)

PENETRATION RATIO

71.46%

3.21%

5.84%

MOBILEFIXED LANDLINEOTHERS

Market Share of Major Players

49%

43%

4% 3%

1%

Column1

NCELLNTCSmart telUTLOthers

• INTERNET USERS IN NEPAL- 26.1%

94%

3%2%

1% 0%0%

Column1

GPRSCDMAADSLWIRELESSCABLE MODEMWIMAX

STATUS OF TRADITIONAL TECHNOLOGY

• Rich in many traditional technologies• Dominant in rural areas• Nepal possesses good technical know-how of traditional

technologies in the following fields-1. Metallurgy, pottery2. Architecture and construction3. Textile manufacture, dyeing and printing4. Paper manufacture5. Food technology6. Agriculture and water management7. Medicines

STATUS OF MODERN TECHNOLOGY IN NEPALESE INDUSTRY

• Commencement of modern technology in Nepal from 1936 through Biratnagar Jute Mills

• Second World War led to establishment of sugar, match, cotton, plywood, and cigarette industries. Most declined after the war.

• The current status is indicated by the following scenario-1. Growing use of modern technology2. Skill base for modern technology3. R and D spending4. Transfer of technology

INFORMATION TECHNOLOGY IN NEPAL

• Low R and D for traditional technologies: Nepal spends .34 % of GDP in Science and Technological based research.

• Entered internet revolution in 1993 when Mercantile Office Systems introduced e-mail services

• Enacted Electronic Transaction Act, 2007

• Japan , World Bank, China, Switzerland, Britain, Australia etc. have been major donor of technological equipment to Nepal.

Uses of information technology in Nepal• Information Management• Planning and control• E-commerce• E-education• E-banking

Ecological Environment of Nepal

5.1 Natural/Geographical profile of Nepal:• Physical profile• Mineral Resources• Flora and Fauna• Water resources• Agriculture

5.2 Ecological Factors Impacting Business:• Physical inputs• Transportation• Communication• Availability of Labor forces• Energy availability and Cost

5.3 Impact of Business on Ecology: •Waste materials disposal•Ecological consequences

Outline of Presentation:

Natural/Geographical profile of NepalPhysical profile• Area: 147, 181 Sq. km• Seasons and Temperature• Geographical Regions of Nepal

Geographical division of Nepal

HimalayanHillyTerai

Geographical Regions

Percentage (%)

Himalayan Region

15

Hilly 68Terai 17

Natural/Geographical profile of Nepal

• Mineral Resources• Flora and Fauna• Water resources• Agriculture

Ecological Factors Impacting Business:• Physical inputs• Transportation• Communication• Availability of Labor forces• Energy availability and Cost

Impact of Business on Ecology: • Waste materials disposal• Ecological consequences

Legal Environment Analysis of Nepal

Legal environment of

business

Court s of law

Business laws

Law administrators

Legal regulations.

Partnership Act, 1964• If two or more person want to establish a firm to initiate

business, partnership firm can be registered.• Firm can be registered under Department of Commerce

(in Kathmandu valley) and  Office of the Cottage and Small Industries ( in outside the valley ) with the recommendation letter of Chambers of Commerce.

• Tax law is applicable and the firm should be renewed each five years where the firm has been registered.

Private Firm Registration Act, 1958 (2014)•  Recommendation letter is required from the Chambers of

Commerce or District branch of FNCCI to register the Private Firm.

•  The license is issued for five years and should be renewed after that period.

•  Trading business are registered under this act.

Company Act ,2006The company must be incorporated in office of register

according to law. It must include two to seven memberThe MOA and AOA guides the operation of overall

company .

Labour related legislation

Labour Act,1992

• Employment and job security, firing of employee• Working hours• Remuneration and yearly pay increment• Health and safety• Welfare provision

• Bonus Act ,1974The bonus shall not exceed ten percent of net profitThe amount of bonus to an individual will depend on the

amount of monthly salaries and wages paid

•Mines and Minerals Act, 1985 (2042)

All mineral products found inside the Nepal are the property of Government of Nepal.

These are classified in two category – Metal and Non Metal

Right to extraction of mineral product is with government. Permission can be given to the private company as per their qualification and previous experience.

License shall be issued for a year and can be renewed. Government can cancel the license if found the licensee doesn't work as per the law.