Colombia PESTEL Analysis

Introduction

PESTEL analysis is a visual tool to identify the external factors and big picture of the environment in which your organization, company, or industry operates; the PESTEL analysis Colombia evaluates market uncertainties and trends in the country to help professionals make informed and intelligent decisions. It is a strategic framework to depict the working state and macro factors that influence the organization. Companies use PESTEL analysis to plan out strategies based on the current and projected business growth. It also gives them a deeper insight into future market trends. They can also identify and prevent any problem in the firm’s structure before it can affect their business. 

PESTEL analysis helps you understand the external factors that might affect your company before establishing a new business. A business start-up depends on multiple environmental, legal, technological, and social factors that externally affect the business for good or worse. PESTEL analysis is the best tool to identify those factors and develop business strategies accordingly. Here, we will discuss the PESTEL analysis of Colombia to analyze its various current and future issues and the external marketing environment. Download the PDF of the PESTEL analysis of Colombia and learn why PDF Agile is the best tool to edit and convert PDF reports. 

Background of Colombia

Colombia is a country in South America founded after its independence from Spain in 1819. The natives of Colombia used to live in settlements and societies before the Spanish arrived and annexed the country in 1492. They formed the viceroyalty of New Granada, which later turned into Gran Colombia after the independence. In 1886, the country was declared the Republic of Colombia. After the liberation of Panama, political violence, and armed conflicts, the major issues ended in 2005, leaving Colombia with a rich cultural heritage. For trade unionists, Colombia is one of the most dangerous countries globally. With a literacy rate of over 95%, the IT industry of Colombia has been in constant growth in recent years. 

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PESTEL Analysis of Colombia

The PESTEL analysis of Colombia explains the external factors that affect the business in the country, including political, economic, environmental, social, technological, and legal factors. It provides a better understanding of the business environment for the organization, which allows them to identify opportunities and take advantage while minimizing weaknesses and threats. Here are the details about the factors in Colombia’s PESTEL analysis.

Political Factor 

The political factors include leadership and change, government and tax policies, foreign trade policies, and other political activities or factors that might affect your business. Understanding these factors before launching a new business or moving your business to another country is best because all companies in every country are affected by political changes and policies. Suppose your company is not flexible and adapts to the change in policies, then your business will fall behind others, leaving you at a considerable disadvantage.

• Political stability is the first thing to discuss in the PESTEL analysis of any country, and Colombia stands at more than 23% political stability, which is far higher than the reports from previous years. Some problems arise now and then due to guerilla groups and the death of participants in the elections. 
• In the republic of Colombia, six political parties control more than ninety percent of the parliament, with thirty-two departments working as part of the country's unitary constitution. 

Political Factor Example: 

After conducting the PESTEL analysis, a Russian company determined that no legal issues stopped them from opening an office in America to deal with Russian clients living there. The PESTEL analysis also helped a company save its business by moving to another country when the government of Brazil was taking over its operating profits. 

Economic Factor

The economic factor analyzes the economic growth of any organization, company, or country by accounting for the affecting economic aspects such as trade deficit, disposable income, and interest rates. 

• The average employment rate of Colombia, according to its PESTEL analysis, has been over 58% average over the last decade. It reached its record high in 2015 and its record low in 2020. The country's gross domestic product change is also -6.8%.
• In 2022, the trade deficit where the value of imports was more than the value of exports in Colombia was 12.48 billion US dollars. The trade balance reached a 9.29% decline between 2020 to 2019. 

Economic Factor Example: 

You can take the impacts of the recent pandemic as an example of the economic factors affected in the PESTEL analysis Colombia. The shortage in labor and rise in mortality rate put many companies and organizations out of business with a huge decrease in income all over the country.

Social Factor

Social factors in the PESTEL analysis Colombia identify society's cultural trends, including demographics and living standards. It also accounted for the culture, population growth, religious trends, and diversity of race.

• Colombia has a demographic advantage because over 60% of the population is of working age, and only 22% population is between the ages of 0 to 14. 
• The balance of wealth in Colombia's society is completely unfair. More than 35% of people live below the poor line, and only 1% of the total population controls more than 45% of the country’s wealth.

Social Factor Example: 

Understanding the social factors of a country helps any company improve its business by engaging its target audience. Suppose your target audience is people from foreign countries; you should conduct a PESTEL analysis to understand social trends related to the products you are selling to advertise your products or services based on their culture.

Technological Factor

In the PESTEL analysis, we analyze the technological factors like research and development of new tech that can improve your business with innovation, new production methods and technology for an efficient production process, advanced marketing techniques to capture the target audience, and improved communication methods to advertise your products or services better.

• Colombia is mainly known for its rapidly growing IT industry, crossing many developed countries since the national digital plan improved internet access. With the automation of production tasks, production lines are becoming more efficient every day.
• Every company has a research and development department to ensure that it is not falling behind its rivals and keeps up with the market trends of using new technology to increase profits. 

Technological Factor Example: 

Internet connectivity, automation, 3D technology, and many other excellent technological inventions have entirely changed the business for any organization because now they have to regularly improve their technology and make production lines more efficient to stay ahead of others.

Environmental Factor

The environmental factors in the PESTEL Analysis Colombia analyze the influence environment on your business and the impact of your business on the environment, including carbon footprints, pollution, global warming, climate, and weather changes. 

• Being the world's second most biodiverse country, the people of Colombia are regularly working on saving the environment and practicing eco-friendly activities. There are laws for environmental conservation that companies must follow.
• Even with all of these eco-friendly activities, the CO2 emission levels increase every year, lowering the oxygen levels and negatively affecting the health of citizens. 

Environmental Factor Example: 

One of the examples of how environmental factors affect a country is physical inactivity in adolescence due to socio-cultural, political, and environmental trends showing different physical results. It proved that creativity and innovation come from active bodies and minds.  

Legal Factor

Legal factors in the PESTEL analysis identify the government laws and policies that legally affect any company, such as consumer rights, industry regulations, labor laws, product safety, etc.

• Colombia is the 60^th-ranked country, with the freest economy and an economic index score of 65.1. 
• It is the 96th most corrupt country with bribery, embezzlement, fraud, or other activities related to gaining an illegal advantage through money or benefits in the world. Its corruption perceptions index score is 70, which is far higher than its score in 2012. 

Legal Factor Example: 

The negotiations between the US and China's new trade agreement are the best example of legal factors affecting business between two organizations or countries. China does not follow US patent laws which violate the country's trade policy and legal factors. 

Colombia PESTEL Analysis PDF

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Key Takeaways

The PESTEL analysis analyzes the macro-environmental factors that impact any business or organization's current and future state. It depicts the political, economic, social, technological, environmental, and legal factors that provide business opportunities or create some issues. PESTEL analysis Colombia is the best example of how the various external factors in the PESTEL analysis affect any organization and help with strategic planning, business migration, start-ups, and problem-solving. PDF Agile is the best PDF editor and convertor, with many creative tools for editing, converting, and compressing your PDF document. It supports multiple formats and comes with an easy-to-use interface.

References

1. Academia “PESTEL Colombia”: From https://www.academia.edu/7089557/PESTEL_Colombia
2. Cayenne Consulting “Legal Factors in your PESTEL Analysis”: From https://www.caycon.com/blog/legal-factors-in-your-pestel-analysis
3. Cayenne Consulting “Political Factors in your PESTEL Analysis”: From https://www.caycon.com/blog/political-factors-in-your-pestel-analysis
4. WallStreetMojo “Economic Factors”: From https://www.wallstreetmojo.com/economic-factors/
5. Pestel Analysis “Technological Factors Affecting Business”: From https://pestleanalysis.com/technological-factors-affecting-business/.