PESTLE analysis of Austria

Political: Austria is a democratic republic country and have a very stable political scenario
from year 1955 onwards, currently Austria is ranked 6th among 58 industrial countries by the
World Competitive Yearbook 2010.

Economic: Austria, with its well-developed market economy and high standard of living, is
closely tied to other EU economies, especially Germany's. Its economy features a large
service sector, a sound industrial sector, and a small, but highly developed agricultural
sector. Following several years of solid foreign demand for Austrian exports and record
employment growth, the international financial crisis and global economic downturn in 2008
led to a recession that persisted until the third quarter of 2009. Austrian GDP contracted
3.8% in 2009 but saw positive growth of about 2% in 2010. The international financial crisis
caused difficulties for some of Austria's largest banks whose extensive operations in central,
eastern, and south-eastern Europe faced large losses. The government provided bank
support - including in some instances, nationalization - to prevent insolvency and possible
regional contagion. In the medium-term all large Austrian banks will need additional capital.
Even after the global economic outlook improves, Austria will need to continue restructuring
and emphasizing on knowledge-based sectors of the economy.

Social: Culture, environmental quality, high living standards, security, classic dwellings and
shopping - Austria has it all and more, when it comes to everyday quality of life. No wonder
that the World Competitiveness Yearbook 2009 ranks Austria number 1 in quality of life

Legal: Labor laws are very strong in Austria and the labor organisations play vital role in
business.

One of Austria’s foremost attractions as a business location is its business-friendly tax

system. Profits are taxed with a standard tax rate of 25 percent - a strong showing even in
comparison to the new EU member states. A levy such as trade or net worth taxes (the norm
in other European countries) does not exist in Austria.

Environmental: For a long time after the war (world war), reconstruction and supporting the
industrial development were the only priorities to Austrians. Only in the late seventies,
environmental movements gained momentum and the general awareness of pollution and
other issues increased. Later, a Green party formed and a number of environmental laws
were released to protect the nature of the nation. The major environmental issues concerned
with Austria are 1) transit traffic mostly in Tyrol & Salzburg (important road link connecting
north and south Europe) 2) industrial pollution.

Other factors:

Climate change and natural catastrophes increasingly influence business location decisions.
Austria ranks second worldwide concerning the security of energy supplies. Electricity is
available more than 99 percent of the time. Austria is relatively free from natural
catastrophes. Accordingly, it is not even listed in the risk evaluations of prominent
international insurance companies.