PESTLE Analysis of Gazprom Coursework Example | Topics and Well Written Essays - 1500 words

PESTLE Analysis of Gazprom - Coursework Example As the paper outlines, Gazprom contributes nearly 10% of the national Gross Domestic Product (GDP) of Russia and aims to make the company the leader in the energy sector (Green Peace, 2013). It supplies resources to the people of Russia and other countries and helps in generating electricity for the people. Much of the revenues of Gazprom are generated from exporting gas to the European countries. The prices charged from the foreign consumers are five times more than the Russian consumers. The growth of the company can be observed from its 5 Years Dividend Growth which is 17.63% with the current P/E ratio of 2.4931. Gazprom, in order to become the leader of the natural gas and oil segment, has explored its business in various European countries and thus has become a profitable corporation (Bloomberg, 2013; Victor, 2008). The objective of the company is to do a PESTLE analysis of Gazprom. The impacts of the political, economic, social and other factors on the operations of the company would be evaluated with a precise focus on the influence of Eastern Europe. PESTLE Analysis The business of Gazprom operates in an environment which is surrounded by several key factors. To evaluate the factors, to understand the opportunities and the threats of the environment PESTLE analysis is conducted. This analysis helps in understanding the environment and the future scopes of the company in the region owing to the social, economic and political perspectives along with the government policies of the region. In this regard, it is determined that Gazprom has its base in Russia and the maximum amount of revenue for the company comes from the Eastern European economy. PESTLE analysis would enable to derive an understanding of the influencing factors which are or would affect the company’s performance, especially in the Eastern European region. Political The government policies of Russia affect the business of Gazprom. Due to government policies, Gazprom enjoyed the power of monopoly for several years in its prices and distribution process of natural gas. The government of Russia submitted a proposal for the intergovernmental agreement which affected the cross border infrastructure. These treaties eradicated the monopoly of the company but made the trade easier. The political rationale behind the policy implication was to expand the business in Russia and in overseas. The traditional political policy was hampering the market share of Gazprom in the European market and hence the need for the tie-up with Qatar emerged to help the company and the country in gaining importance in Europe (Hulbert, n.d.). The investment from the Russia government would help in the development of Gazprom and the economy of the country as well. Moreover, it is also observed that the political dispute between Russia and Ukraine was affecting the gas prices and its trade. The use of gas by Moscow from the underground gas storage affected the transportation to Europe. The trade barriers and the high prices are affecting the business and the economy of Russia. To regain its market in the European countries, an agreement is being done by the government to lower the price of gases in Lithuania. Moreover, the Russian political environment used Gazprom as an instrument for foreign policy to remove gas supply to Georgia and Moldova.