PESTEL Analysis

The PESTEL analysis contains the analysis of Political, Economic, Social, Technological,
Environmental and Legal environments of a country with reference to a particular object. The
PESTEL analysis of Sysco Corporation is as follows:
Political
The decisions taken by the government can have significant impact on the companies
operating in the markets. The environmental issues show increased influence on the political and
legal actions. The consumer concerns about food and health safety has pressured the government
to pass regulations and laws in order to protect their people. The government of USA has tried
to leverage the farmers of fruits, wheat etc by helping them with the business contracts and
relations. These actions have significant impact on the business networks related to food industry
in the country. These direct business contracts have minimized the revenues of the food
distributors and various others.
Economic
The government of USA predicted that the economic crises will continue to prevail for
many years and the recovery will require patience and efforts of the people. The economic crisis
has impacted entire nation and the world. All the companies are trying hard with the available
cash and declining revenues to stay active in the markets in the current economic downturn. The
period including difficult economic conditions and heightened uncertainty in the financial
markets can impose profound impact on the business of Sysco Corporation. From late 2008 to
the beginning of 2010, the fluctuating economic conditions in the financial markets have
negatively affected the consumer confidence level and their level of spending. This has led to
reduced frequency of dining out and the money spent by the consumers for take away. These
market conditions negatively impacted the sales of the company by declining the sales trend
from positive 9 percent to negative 8 percent during the first quarter of 2010. The increased costs
of food have badly impacted the industry. These costs have increased the cost of production costs
that has ultimately affected the prices of the products which in turn affects the consumer buying
behaviors.

Social
The cultural and social trends in America and world can have significant impact on the
business operations of the companies. These trends greatly affect the types of food that people
want to eat. In order to meet the customer demands, the companies operating in the markets have
to make the right move in the supply chain networks. The societal and cultural trends affect the
entire supply chain, all the way back to the farmers, who must change their practices to satisfy
the market demands.
It is necessary for the food distributing companies and services to understand the needs of
the current markets and respond to these changing needs in order to remain in the business and
maintain their competitive edge. Currently there are trends in the American culture that have
impacted the business of these food distributors. These trends may involve customer priorities to
the health, safety, cleanliness, and ethical practices etc.
The trend of organic foods has become very significant. According to the survey conducted by
OTA in 2007, there were increased sales in the organic food and beverages from one billion US
dollars to over fifteen billion US dollars in the last decade. Now many food related businesses
like hotels, restaurants etc. are now mandated by the government to display the details about the
calories, fats etc on their menus as well as the nutritive values of their food items.
Technological
The technology plays significant role in the food service distribution networks, its
suppliers and its customers. Without subsequent amount of technology, the chances of failure of
the distributor will increase. The industry must become more technology based because of the
growing concern of global economic situations. The high price of fuel causes the increase in
prices for certain or nearly all products being delivered across city and especially across state
lines.
Sysco Corp. is in a process of developing and implemented the software system that will
integrate all of its business units and process to align its business operations which in turn will
reduce their costs. These systems are commonly referred to as Enterprise Resource Planning
systems. The management expects that the implementation of these software programs will
increase the benefits to the company.
Environmental
Sysco is striving hard for the environmental safety and is taking initiatives to improve its
impact on the environment of the locations it operates in. These initiatives includes introduction
of pest control system to promote the healthy environment partnership with its supply chain
partners. The other initiatives might include the protection of sensitive areas, waste management,
recycling of paper, reusing the resources, less consumption of energy etc.
Legal
The operations of the company are subject to various rules, regulations, laws imposed by
the local and international governments based on the food production, safety, manufacturing,
packaging etc. of products. The company business units where the integrated processes related to
the business are conducted are also subject various laws relating to the protection of the
environment, including discharge of materials into the environment, health and safety issues of
employees.