The Netherlands is a small, coastal country located in Western Europe. With its developmental index, the Netherlands has seen little economic or social distress in recent decades. As a result, it’s easy to think that the country is facing no issues whatsoever — but is that really the case?
In this article, we’ll use PESTEL analysis, which evaluates the Political, Economic, Sociocultural, Technological, Legal, and Environmental factors affecting a country, to determine where the Netherlands stands in the current macro environment.
Note: PESTEL analysis is a business analysis tool that’s usually applied to for-profit organizations to identify threats and opportunities. This article instead uses the PESTEL framework to evaluate an entire country!
Here are the Political factors affecting the Netherlands:
One of the defining features of the Netherlands’ Political landscape is its membership to the European Union. The EU is a collection of almost 30 European states which benefit from favorable regulation with regards to trade, travel, and more. As a major exporter of various goods (including food, chemicals, and machinery) this membership is paramount to its Economic status. For the foreseeable future, it seems like the European Union will continue to thrive; however, with Brexit, we may see the EU disband in the years to come.
Here are the Economic factors affecting the Netherlands:
As a well-developed European country, the Netherlands has some of the highest incomes in the world. With even unskilled workers earning a good salary thanks to high minimum wage cutoffs in the country, the country’s Economy is significantly more liquid than it would otherwise be. This means that both businesses and individuals are willing to spend, leading to a positive spiral of commerce.
Global Economic Changes
Like any country, the Netherlands is affected by changes in the worldwide Economy. As a major exporter of goods, the country is bound to suffer when others do. The Netherlands was strongly impacted by the 2008/2009 recession, and signs of this are evident to this day. Some economists believe that another global recession is to come shortly, but some believe it can be avoided thanks to early warning signs.
Here are the Sociocultural factors affecting the Netherlands:
As a member of the European Union, the Netherlands inherently has a very open take on immigration. Together with the country’s high standards of living, this has led to rapid immigration. More than 10% of the country’s population is accounted for by immigrants of non-Western origin, and almost that many again are immigrants of Western origin. Some European countries have struggled with the Sociocultural issues resulting from immigration (such as social distress); it’s unclear whether the Netherlands will face similar issues as immigration numbers continue to rise.
An important aspect of Dutch society is its liberalism. This may be one reason why the country has seen so few issues with immigrants: because the country’s natural residents are so understanding. Aside from immigration, the Netherlands is said to be extremely liberal with regards to sexuality (showing proud acceptance for the LGBT community) and even substance use.
Here are the Technological factors affecting the Netherlands:
Being such a well-developed country, the Netherlands has fantastic access to technology. This includes telecommunications infrastructure, modern healthcare equipment, and manufacturing tools. Not only does the country as a whole have great access to technology, but so do its citizens thanks to their substantial incomes. Overall, this access to technology allows the country to continue developing with the times, while maintaining a competitive edge in business efficiency in the current day.
Social Media in the Netherlands
Another interesting aspect of the Netherlands’ Technological landscape is its high usage of social media. Perhaps as a result of the country’s excellent connectivity, its residents regularly use social media platforms like Facebook, WhatsApp, Instagram, and SnapChat. This social media usage allows citizens to stay up-to-date with the latest news, while also allowing retail companies a unique, powerful customer touchpoint.
Here are the Legal factors affecting the Netherlands:
As mentioned earlier, the Netherlands has a very liberal approach to Sociocultural issues. Not only is this reflected in individual residents’ personal opinions, but it’s also hardwired into the country’s regulatory frameworks. Perhaps the most notable example of liberal Dutch regulations is the legality of cannabis, but the country is also said to have a highly progressive stance on issues such as prostitution, same-sex marriage, and euthanasia.
Here are the Environmental factors affecting the Netherlands:
Risk of Flooding
The Netherlands has a reputation for being a “low” country (from a geographical perspective). In fact, this belief is very true: large parts of the country are located below sea level, making them extremely prone to flooding. This propensity to flooding is even scarier given the issue of climate change: one effect of global warming is rising sea levels, while another is more extreme weather cycles. Together, these two factors could work in compound to increase the risk of devastating floods.
Renewable Energy Use
Given its high developmental index, it may be surprising to know that the Netherlands only derives a minimal amount of energy from renewable sources. The country’s current target is to generate just 14% of its power from renewable sources, leaving it far behind other developed (especially Northern) European countries.
PESTEL Analysis of the Netherlands: Final Thoughts
The Netherlands is a well-developed European country with high export figures. By using PESTLE analysis, we’ve been able to identify a number of factors that could impact the country’s future. Positive factors include the country’s EU membership, a thriving economy, social liberalism, and Technological advancement. On the other hand, the country is facing some scary prospects, like Environmental issues of low renewable energy use and high flood risks.
Overall, it seems as though the Netherlands is in a good place both in terms of its people and government. While it is facing some serious environmental issues, the country should be able to tackle these with its social level-headedness and significant financial stability.
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