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A Pestel Analysis Of Australia Economics Essay

Australia is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania and numerous smaller islands in the Indian and Pacific Oceans. Neighbouring countries include Indonesia, East Timor and Papua New Guinea to the north, the Solomon Islands, Vanuatu and New Caledonia to the northeast and New Zealand to the southeast.

For at least 40, 000 years before Western settlement in the late 18th century, Australia was inhabited by indigenous Australians who belonged to 1 or more of approximately 250 language teams. After discovery by Dutch explorers in 1606, Australia's eastern 50 percent was stated by Britain in 1770 and primarily resolved through penal transportation to the colony of New South Wales, officially founded on 7 February 1788 (although formal possession of the land had occurred on 26 January 1788). The population grew gradually in subsequent generations; the continent was explored and an additional five self-governing Crown Colonies were founded.

On 1 January 1901, the six colonies became a federation and the Commonwealth of Australia was made. Since Federation, Australia has managed a stable liberal democratic political system and it is a Commonwealth realm. The populace is 22 million, with approximately 60% concentrated around the mainland status capitals of Sydney, Melbourne, Brisbane, Perth and Adelaide. The country's capital city is Canberra, in the Australian Capital Place.

A prosperous developed country, Australia is the world's thirteenth most significant economy. Australia ranks highly in many international evaluations of nationwide performance such as individuals development, quality of life, health care, life expectancy, public education, economic flexibility and the safeguard of civil liberties and politics rights. Australia is a member of the United Nations, G20, Commonwealth of Countries, ANZUS, OECD, APEC, Pacific Islands Message board and the globe Trade Business.


There are many factors in the macro-environment that will results the decisions of the professionals of any organisation. Taxes changes, new laws, trade obstacles, demographic change and federal government policy changes are all types of macro change. To greatly help analyse these factors we can categorise them using the PESTEL model.

Political factors. These make reference to government policy like the degree of intervention throughout the market. What goods and services will a administration want to provide? To what extent will it really believe in subsidising firms? What are its priorities in terms of business support? Political decisions can effect on many essential areas for business including the education of the labor force, the health of the country and the grade of the infrastructure of the economy including the road and rail systems.

The federal government is sectioned off into three branches:

The legislature: the bicameral Parliament, composed of the Queen (symbolized by the Governor-General), the Senate, and the House of Associates;

The exec: the Government Executive Council, in practice the Governor-General as recommended by the Perfect Minister and Ministers of Talk about;

The judiciary: the High Court docket of Australia and other national courts, whose judges are appointed by the Governor-General on advice of the Council.

Business in Australia has a high amount of certainty

Australia is a safe vacation spot for investment. The country's politics and regulatory environment is steady, open and intensifying, providing traders with a higher degree of self confidence and certainty.

Australia's strength as an investment vacation spot stems, in part, from a political system that is assessed to be impressive in giving an answer to economic obstacles and policy direction. The adaptability of Australian government plan to changes throughout the market has been positioned in the top two countries in the region.

Similarly, the transparency and efficiency of administration are also graded highly.

Efficient and clear legal framework

Australia also has an open, successful and clear legal framework. Corruption levels are judged less than those in the US, the UK, Canada and most regional countries.

These results can be attributed to a strong system of investigations and amounts, and an extremely well known judicial and police system.

Stable politics environment

The advantage to companies of a stable politics environment can flow through to the bottom line.

'Australia is one of the main markets for MNCs in the Asia-Pacific region. Australia hosts a growing economy; a well balanced politics and business environment; an experienced, well educated and multi-lingual labor force; a strategic time-zone and a competitive cost bottom. These factors provide a advanced market and the right environment allowing various MNCs to drive invention and technology. '


Property prices are generally high in regards to income levels in Australia, creating a great demand for rental properties. In fact this demand is so saturated in some major locations that local rental prices are securely established to increase, making any purchase into a buy-to-let property market probably profitable. As the population expands and incomes climb, the demand for real estate now outpaces source, causing prices to keep rising.

Capital Growth

Australia still has certain specific areas offering great investment opportunity. For instance, in 2006 Perth property prices increased by between 36. 6% and a staggering 42% and commercial properties in locations such as Brisbane and Perth are also presently offering many excellent results on investment.


"Natural investment" strategies are viable options in many areas, allowing you to purchase off-plan property in Australia at the best possible prices. Investors purchasing as early as possible with a minimum "money-down" payment and then reselling prior to conclusion are gaining significant profits.

Low-cost Commercial Property

Australia's cost-competitiveness has led to an increasing number of overseas companies using Australia as a headquarters for their Asian businesses. Between January 2002 and March 2003, 54 overseas companies founded or relocated their operating centres in Australia, rendering it one of the most successful countries on earth in getting such investment. Today Australia constantly emerges as an inexpensive base amidst developed nations.

Currency Exchange

Currency exchange rates against euros, us dollars and sterling are incredibly favourable in Australia today, making property investment a stunning option to international buyers who avoid sacrificing vast levels of money in their exchange transactions from the Australian dollar. In addition, foreign purchasers are generally in a position to buy a lot more because of their money than "back home".

Cost of Living

The cost of moving into large cities such as Melbourne, Adelaide, Brisbane and Perth is considerably significantly less than that of the world's priciest cities. At exactly the same time, Australia's major cities are all placed on the list of world's top 30 cities in terms of quality of life.

Economic Stability

Australia's strong economic growth rates are greater than generally in most OECD countries including the US and UK. Currently the country's GDP is higher than that of the UK, Germany and France for example. There's a low degree of risk in the Australian economy while it boasts consistently strong GDP growth, stable interest levels, increasing exchange rates, relatively high levels of employment and a low rate of inflation.

In the primary locations unemployment is relatively low and normally the nationwide unemployment statistics stand at around 5%. The united states obtains many applications each year from those desperate to immigrate to Australia and enjoy the high standard of living and basic opportunities the united states has to offer.


Repayment mortgages are available to buy property in Australia, covering 75-80% of the valuation or purchase price (whichever is lower) and they are available for an interval of between 5 and 30 years. Interest only home loans are widely available in Australia and are on offer for 5 or even 10 season periods.


Changes in sociable trends can effect on the demand for a firm's products and the availability and willingness of individuals to work.


Classes and Castes. The three main social classes will be the working class, the middle class, and top of the class, however the boundaries between these communities are a subject of controversy. The wealthiest 5 to 10 % are usually thought to be upper class, using their wealth derived from ownership and control of property and capital. The growing middle class is thought as individuals with nonmanual occupations.

Nonmanual staff typically earn more than manual staff, although upper-level manual personnel such as tradespeople earn more than those in sales and personal service positions. The occupations, such as such occupations as accountants, processing specialists, technical engineers, and medical doctors, have been one of the most effective growing areas of the economy. Because the 1980s the number of manual workers has been in decline.

Manual employees form the nucleus of the working school; 20 to 40 percent self-identify with this category. Course consciousness includes the acknowledgment of school divisions, but gleam broad commitment for an ethic of egalitarianism. Australians commonly think that socioeconomic mobility is possible and exhibit a basic tolerance and popularity of inequality associated with social class.

Symbols of Public Stratification. The upper-class can be signified by expensive clothes, automobiles, and homes. In particular, the economic value of housing and other properties varies greatly across different suburbs in every cities.

However, school is not always evident from clothes, vehicles, and living circumstances. Middle-class folks from economically rich backgrounds may cover up their prosperity according to fashion, choice, or participation specifically subcultures. Teenagers such as students may dress to imitate imagined styles valued because of their symbolic rejection of prosperity, and some working-class families get into debt to get expensive autos and other commodities.

Patterns of talk, consumption patterns associated with entertainment and the arts, and involvement in certain sports may be useful indicators of category.


Infant Care. Child rearing varies noticeably with the country of origin, category background, the training and profession of the parents, and the religious group to which a family belongs. Some practices are aimed at developing a liable and impartial child, Aboriginal and many migrant households tend to engage small children more than do most Anglo-Celtic parents. Some ethnic communities supervise their young more totally than the dominating Anglo-Celtic population, motivating them to mix only with family and friends, be dependent on the family, and leave decision making to the parents.

Child Rearing and Education. Moms will be the preferred main caretakers, although fathers are taking increasing responsibility for child attention. Before mothers weren't as isolated in their child care responsibilities, acquiring help from teenagers, lengthened kin, and neighborhood friends. The decrease in family and home size in recent years has meant that the responsibility of care comes largely on moms. There exists significant variance in ideas about good parenting, reflecting the diverse social values and traditions of parents' cultural background.

Higher Education. Advanced schooling is considered to own best occupations. Consequently, tertiary education has become more widely available and is performed by an increasingly larger proportion of the population. It really is available in two varieties: colleges and establishments of technical and additional education (TAFE). In 1992, 37 percent of women and 47 percent of men received post-school skills, and 12. 3 percent of the work force held university levels in 1993. Universities also attract significant numbers of international students. The federal government is accountable for funding most colleges and corporations, with increasing contributions being created by students in the form of fees and postgraduation tax payments.


New technologies create new products and new procedures. Technology can keep your charges down, improve quality and business lead to innovation. These developments can benefit consumers as well as the organisations providing the products.

Two organizations support almost all of Australian federal government research and development. The Commonwealth Scientific and Industrial Research Organization (CSIRO), headquartered in Melbourne and founded in 1926, can be an independent government organization that facilitates research and development in every areas of the physical and biological sciences except defense knowledge, nuclear energy, and specialized medical medicine. The Defense Research and Technology Group (DSTO), headquartered in Canberra, helps armed forces research and development by giving scientific and scientific assistance to the Australian Defence Force and Section of Defence.

Several issues dominate current Australian science and technology coverage: the attentiveness of research and development in national research centers; tensions among and between university analysts over allocation of research and development money resources; effective communication between industry, administration, and university experts; the growing role which industry is participating in to get national research and development; and the role which Australia is playing in international science and technology collaboration. High-technology exports totaled $1. 5 million in 1998.

Government cash about 55% of all research and development and industry about 40%. In 1996, there were 73 agricultural, medical, clinical, and specialized professional organizations and societies, the most important which is the Australian Academy of Science, founded in 1954 by royal charter. The Australian Academy of Technological Sciences and Anatomist was founded in 1976. The Australian Knowledge and Technology Council (ASTEC) has an independent source of counsel for the Australian Leading Minister; it's role was augmented in 1986 by the creation of an post for a Minister Assisting the Leading Minister with portfolio for knowledge and technology.

Environmental factors:

Environmental factors are the weather and weather change. Changes in temps can impact on many market sectors including farming, tourism and insurance. With major environment changes occurring due to global warming and with better environmental recognition this external factor is now a significant issue for businesses to consider. The growing desire to safeguard the surroundings is having an impact on many companies including the travel and vehicles market sectors (for example, more fees being put on flights and the success of hybrid automobiles) and the general move towards more green products and functions has effects on demand habits and creating business opportunities.

The Environment Cover (Impact of Proposals) Function of 1974 establishes strategies for making certain environmental impact is considered in governmental decision making. The Whale Protection Act of 1981 prohibits killing, taking, injuring, or interfering with a whale, dolphin, or porpoise within Australia's 200 mi financial zone or, beyond the zone, by Australian vessels and aeroplanes and their crews. THE SURROUNDINGS Protection (Nuclear Codes) Function of 1978 mandates the introduction of uniform safety requirements for uranium mining and milling and for the transportation of radioactive materials. The Safeguard of the ocean (Discharge of Oil from Boats) Act of 1981 and the Security of the Sea (Reduction of Pollution from Ships) Take action of 1983 prevent or limit pollution from engine oil or toxins.

Water being truly a scarce source in Australia, problems of drinking water quality and availableness are a frequent concern. As of 2001, the country experienced only 352 cu km of renewable normal water resources, although safe normal water was open to all metropolitan and rural dwellers. A reason for concern has been the increased salinity in the Murray Valley, induced by diverting normal water inland from the seacoast for irrigation, as well as the climb in saline water tables in Western Australia, credited to excessive land clearing for dry-land farming.

Another significant environmental problem is inland harm due to land erosion. The quality of the dirt is also affected by salinization. As of 1993, Australia had 145 million hact. of forest and woodland and possessed the 3rd most extensive mangrove area in the world, covering over one million ha.


These are related to the legal environment in which companies operate. The introduction old discrimination and impairment discrimination legislation, a rise in the minimum wage and higher requirements for firms to recycle are examples of relatively recent laws that have an impact on an organisation's actions. Legal changes can affect a firm's costs (e. g. if new systems and procedures have to be developed) and demand (e. g. if regulations affects the likelihood of customers purchasing the good or using the service.

Contractual issues

Contracts don't need to be in writing on a formal report and authorized to be officially binding. The major components of formation of an deal are offer and approval; consideration; intention to generate legal relationships and certainty of conditions. Thus, provided these elements are fulfilled, a deal may be construed via exchange of e-mails, scribbling on the back of the docket or even verbal exchanges.

Compliance with government sanctions and regulations

Exporters should be aware that Australia retains United Nations Security Council sanctions and bilateral sanctions in respect of a number of countries. These sanctions require Australian organisations and individuals to comply with a range of options and, generally, also apply extraterritorially to Australian nationals overseas. Sanctions can include export and transfer constraints, prohibitions of technological assistance, training and financing, travel sanctions, and financial sanctions against specific persons and entities.

Dealings with terrorists - the actual Australian business community should know

The Government has passed laws rendering it a legal offence to hold property that are had or controlled by terrorist organisations or individuals, or even to make assets open to them, punishable by up to five years imprisonment.

In addition to the Consolidated List, the Australian Government also retains a list of groups that are proscribed as terrorist organisations under the Lawbreaker Code.

Australian companies must ensure that they have checked the qualifications of overseas associates and purchasers. Australian companies also need to remember that there are fraud operations working in some markets and again this emphasises the necessity to conduct background checks. Before putting your signature on or accepting deals, it is your interests to seek professional legal advice from legal companies focusing on international work.


Porter's Gemstone Factor Model (DFM) is a theoretical platform that achieved prominence in Australian monetary insurance plan development since its inception in 1990. Despite its widespread adoption, however, Australia has remained significantly below the OECD average in conditions of its industrial clusters' efforts to advancement and real prosperity creation. In order to conceptualise the precise role that Porter's DFM might play in the Australian coverage development framework, this paper analyses the 25-yr history of the discussion between your Tasmanian state and the Tasmanian Light Shipbuilding Industry cluster. This evaluation provides an insight into the set of government jobs that facilitated the development of one of Australia's most internationally competitive industry clusters, and proposes a reconceptualisation of Porter's DFM that will potentially increase its value as a predictive tool for local economic development

Factor conditions: These are the economists' traditional factors of development: land, labor, capital, and infrastructure.

Demand conditions: The characteristics of the domestic market, like the size, demand, value, and style.

Related supporting industries: The occurrence of suppliers and supporting establishments that are similarly competitive and of high quality.

Firm strategy, structure, and rivalry: The regulatory and other governmental environment where companies are created, organized, and managed, including the nature of the domestic competition.

Since the 1970s, the onrush of globalisation in Australia's markets has offered significant economic insurance plan obstacles to the country's federal and state government authorities. A major concern for Australian legislators was the question of making a nation previously protected by the 'fortress' of tariffs and subsidies more beneficial and competitive in world market segments. One theoretical framework that achieved prominence in Australian financial insurance plan development was Porter's Industrial Cluster Theory (ICT). Porter's ICT proposes that for an area to increase its innovative capacity and export earnings, its government must interact to build up a sustainable selection of internationally competitive industry clusters. Porter's ICT argues a nation's industry clusters is going to be internationally competitive if the synergistic interrelationship prevails between four Stone Factor variables (i. e. 'Factor Conditions', 'Local Demand Conditions', 'Related and Encouraging Industries', and 'Organization Strategy, Structure and Rivalry') and the two influencing roles of 'Chance Events' and 'Administration' for a talk of the Diamonds Factor Model (DFM) that underpins ICT.

The role of authorities in the level of cluster life cycle:

The first was the express government's initial non committal stance for the development of the state's burgeoning shipbuilding industry. At that time, the government's plan focus was primarily on the macro-economic restructuring of the state's overall economy from its dependence on hydro-industrialisation, rather than the expansion requirements of the actual industry cluster.

The second key role was the point out government's development of the region's reputation within the broader local maritime market as a nationwide centre for maritime research. The Tasmanian authorities implemented a series of lobbying initiatives that led to the federal government providing additional funding to the Australian Maritime School and relocating its countrywide maritime research institute (the CSIRO) to Hobart. These state government lobbying initiatives were largely targeted at the federal government rather than the private sector, but their success got implications for the region's 'Factor Conditions', 'Related and Aiding Industry', and 'Local Demand Conditions'. The regional economy's factor conditions were advanced by producing the region's supply of human being capital through both the technology of specialised employment and education within the broader industry.

The Tasmanian government's enhancement of the region's reputation helped to develop the demand conditions faced by the private sector shipbuilding firms, most significantly in the from of customers prepared to import their products from interstate.

Competitive good thing about Australia:

Instant access to high technology

Given the proven track record of Future Materials' partners, as well as our highly skilled, experienced team of experts, Australian companies will have easy access to the kind of services and equipment recently difficult to attain. For example:

Materials characterization and evaluation

Problem solving, such as investigating contaminants and materials failures.

Studies and assessment on coatings, slim videos and surface changes.

Expert and 3rd party view in litigation and IP things.

Collaborative research assisting the introduction of services and procedures.


The government's insurance plan focus was generally on the macro-economic restructuring of the state's market from its dependence on hydro-industrialisation, rather than the development requirements of the industry cluster.

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