Basa, Michelle Mae G.

February 17, 2019

Canteros, Gladys C. MGNT410
Flaminiano, Boyvic T. Dr. Oscar P. Lacap, Jr.
BSA41

PESTLE Analysis
Ma. Gina G. Basa Woodcraft

POLITICAL

Ajun Valenzuela, executive director of the Philippine Chamber of Handicraft

Industries (PCHI) stated that they are partnering with design schools like the University
of Santo Tomas and University of the Philippines to train more designers. Valenzuela
said this way the country can also address the so-called brain drain in the handicraft
business.

Government’s support programs in terms of marketing initiatives also boost the

industry. The Department of Trade and Industry provided P10 million for a two-year
marketing strategy to penetrate prospective countries by sending delegates to such.

ECONOMIC

Unable to compete on price with vast numbers of mass-market, machine-made

Chinese imports, many manufacturers in the Philippines' handicraft and design sector
are looking to woo buyers with premium quality goods and bespoke finishing. Although
the Philippines has a long tradition of innovative design and local handicrafts, recent
years have seen its products losing ground to cheaper, mass-produced items from
China. For many in the sector, this has driven them to seek out new and niche markets
– sectors where customers are prepared to pay a premium for quality and original
design and are not just buying base on price alone.

Fluctuating foreign exchange rates also affect the handicraft business in the country,
forcing some companies to shut down. Ajun Valenzuela, executive director of the
Philippine Chamber of Handicraft Industries (PCHI) noted that in last year, 60 exporting
local companies closed shop because of peso appreciation against the dollar.

SOCIO CULTURAL/SOCIAL

In the Philippines, there is evidence to indicate that the sources of ethnic and
indigenous handicrafts are themselves threatened by the inroads of modern technology.
First, environmental degradations are starting to encroach on indigenous sources of raw
materials. The spread of urban lifestyles, coupled with advances in communications
technology as well as access to manufactured goods, are eroding rural or native
lifestyles.

The consumption rates for handicrafts from the Third World countries are not
showing signs of diminishing. Actual demands indicate a resurgence of handcrafted
goods especially with the advent of new applied technologies in processing and the
variety of available artificial materials to work with.

TECHNOLOGICAL

Many Filipino families are becoming engaged in handicraft businesses especially

when this has become their main source of livelihood even before it has been
introduced and known to the market. Filipino craftsmen have indigenously overcome
scarcity and increasing prices of raw materials by constantly producing new designs for
their products. Over the years, Philippine handicrafts have evolved through innovative
changes in designs reinforced by exciting choices and combination of indigenous
materials.

Forest Products Research and Development Institute (FPRDI) studies the

processing of Non-Timber Forest Products NTFPs, including preservation and drying
techniques to make them pest-resistant, appealing, and useful.

“Thru our studies, we help our clients sustain their businesses by introducing to
them a wide array of raw materials that were once unknown to them. We are hopeful
that more entrepreneurs would be encouraged to venture into the furniture and
handicraft business thru the aid of FPRDI’s technologies,” said FPRDI Director Romulo
Aggangan.

LEGAL

The handicraft industry, as what can be observed from present legislations, is

one that is not heavily regulated. There were regulatory control on chemical restrictions
used by handicraft makers, according to news, but this does not apply to the specific
product produced by the company.

Having serious concerns about global warming, however, the Philippines is in

journey trying to recover forest covers. In fact, the legislative body, particularly the
House of Representative, probed illegal logging activities just this 2018. This suggests a
negative effect on the supply of wood for the business and even for other companies in
the industry.

ETHICAL/ENVIRONMENTAL

Environmental factors such as changes in weather conditions may affect the

company, but not immensely alter its business and revenue generation as these factors
affect agricultural ones more directly.

What’s more of an influencing factor is the seasonality of demand by customers.

Since the company is involved with production of religious items, sales from such
increase when there is a significant religious event/days coming up like the Holy Week,
Christmas, etc. In addition to this, demand is also affected when customers have
expended for tuition fees (eg. months June to August).

The company may not have the opportunity to practice ethical sourcing since
only few suppliers contact them regarding resources needed for production, applying
such principle may cause insufficiency of input. However, the business make sure of
proper disposal of scrap that resulted from production.