I am a manufacturing firm.

I want to establish a manufacturing facility for

plastic bags or a facility for paper bag.
Perform a PESTLE analysis and evaluate which one lower risk.
Ans : A PESTEL analysis is an acronym for a tool used to identify the macro (external)
forces facing an organisation. The letters stand for Political, Economic, Social,
Technological, Environmental and Legal. Depending on the organisation, it can be reduced to
PEST or some areas can be added (e.g. Ethical)
In marketing, before any kind of strategy or tactical plan can be implemented, it is
fundamental to conduct a situational analysis. And the PESTEL forms part of that and should
be repeated at regular stages (6 monthly minimum) to identify changes in the macro-
environment. Organisations that successfully monitor and respond to changes in the macro-
environment are able to differentiate from the competition and create a competitive
advantage.
Let’s look at each element of a PESTEL analysis.

Political – The rise of anti-plastic has been widespread rapidly around the
globe (Clapp & Swanston, 2009). With the government regulation of banned
usage of plastic bags, it has quickly impacted many cities and towns. With
this regulation, it reflects a shift from traditional plastic to biodegradable
plastic hence, organizations have mainly focused on biodegradable plastic
because they believe that it is harmless to the environment as it helps to
promote environmental awareness (Daily Express, 2017).
In other hand I think there is no political interference in producing Paper
bags. So, it is risk free.

Technological – With the help of advanced technology, we are able to create

environmentally friendly plastics, (1) Bioplastic (2) Biodegradable Plastic.
Unfortunately, bioplastic is not the full alternative due to complicated
intermediary steps of production which are costly (Phys.org, 2015).
Therefore, organizations choose to promote greenery by using the cheaper
alternative which is biodegradable plastic, as bioplastic that is made out of
natural materials (corn & potatoes) can cost 10 times more compared to
traditional plastic (Kerr, 2012). Technically it is easy to produce plastic bags.

Whereas paper bags are difficult to produce, as it produces from forest

material such as wood, wastage paper etc. The machines which is used to
making paper bags are worthy and it takes long process.

Environmental – Both plastics can still be degraded, but Woodford (2017)

reported that when bioplastic breaks down, they do not generate a net
increase of carbon dioxide, which is 70% fewer greenhouse gases to be exact,
contrasted to biodegradable plastic and traditional plastics. Bioplastic is made
from natural materials while biodegradable plastic is made from traditional
petrochemicals. Therefore, biodegradable plastic is more harmful as the
methane is released into the atmosphere when it is degraded in the landfill. It
may be cause to polluted environment.

In case of Environmental factor paper bags are totally risk free. Because it is
harmless and there are no chances for raising pollution due to paper. It is
safest mode to decrease pollution than plastic.

Social - Companies must increasingly rely on complex networks of suppliers and other
third parties and they are therefore exposed to ever greater risks. To form an overall picture
of the risk, companies must first obtain an overview of the socio-cultural risk factors and then
focus on the most important details. And socially also plastic has banned so it may include
higher risk.
Socially using paper bags instead of plastic bags is very useful to save our environment. As
well as most of people uses paper bags nowadays. So, I think there is less risk in social factor
to manufacture paper bags.
Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and
make decisions. For example, Plastic goods plays some role in the economic
growth. Therefore, it is not much risky in case of Economic factor.
Whereas, paper bags are cheaper than the plastic bags. So, it is affordable for
people. Therefore, most of people use it. So, it is quite risky as per economic
growth.

Legal factors include discrimination law, consumer law, employment law, and health and
safety law. These factors can affect how a company operates, its costs, and the demand for its
products. So, according to laws and regulations plastic is banned. Because it is not safe for
people and also for environment. Therefore, legally it is risky to manufacture plastic bags.
And to facilitate paper bag is legally not risky. Government will not interfere
in this process. So, it is safe in legally manner.

CONCLUSION:
According to me plastic bags are riskier than paper risk. Because plastic
generate lot of pollution, due to this environment is not safe. As well as we
cannot recycle plastic. Whereas, we can reuse of paper and it is totally
harmless. So, it would be better to give preference for facilitate paper bags.