Manufacturing overseas: Important PESTEL considerations with overseas operations

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This article explores some of the most important things to consider when considering overseas manufacturing – political, economic, social, technological, ecological, and legal considerations.

Political considerations

Political differences can be a big concern when operating overseas. Some countries have 

  • Political stability: Is there likely to be a change in the ruling party and how may this impact your operations. 
  • Government seizure of property: While unlikely in most countries, in some regions there may be a risk that the government will step in and take possession of your operations.
  • Political connections: To what extent is it important to develop connections to the government. 

Economic considerations

  • Exchange rates: How would your organization be impacted by changes in exchange rates that may increase the cost of importing from abroad.
  • Tariffs: To what extent do tariffs impact the products that you are importing or exporting, and what is the possibility of these tariffs changing and impacting your operations. 

Ecological considerations

It is important to be aware of how vulnerable your production line is to disruption that may be caused by natural disasters. Some regions are more susceptible to supply chain disruptions, and taking these into account can help ensure that you are not caught off-guard by disruptions. 

Legal considerations

It is important to recognize that many laws will differ between countries. Some laws may be considered more stringent, others less so, and some just different. Being aware of these differences is important to ensure that you comply with the regulation. 

  • Different labor laws: How ill differences in mandatory benefits impact your operations. 
  • Permits for operations: What is the approval processes like for establishing your facility. 
  • Environmental standards: How will different manufacturing standards impact your ability to operate

Final thoughts: Familiarizing yourself with differences in overseas operations

The key thing to ensure that you are aware of when operating overseas is familiarizing yourself with differences between the setting that you are aware of, and the setting that you are moving into. Recognizing the differences between areas, that the impact that these changes can have on your strategy can be important – you may need to adapt your approach to successfully operate in a different market. Familiarizing yourself with the differences before you enter the market can help ensure that you are not taken off-guard by differences when you enter the market.