PESTEL analysis of Denmark (Denmark country profile)
This PESTEL analysis of Denmark offers an examination of some of the macroenvironmental issues i.e. political, economic, social, technological, environmental, and legal factors that affect Denmark today. Denmark, a Scandinavian country, is officially known as the Kingdom of Denmark. It is often regarded as one of the most economically developed countries in the world.
Political factors affecting Denmark
Denmark functions as a constitutional monarchy, with a representative parliamentary system. As with virtually all constitutional monarchies, the monarch in Denmark too has mostly ceremonial duties even though, he/she retains the executive power. The monarch does not side with any political persuasions; however, performs some important official duties such as, signing laws that have been passed, and appointing and dismissing the Prime Minister.
Needless to say that Denmark is a politically stable country. It is also one of the safest countries in Europe. It maintains good relations with other countries; however, it has boundary dispute with Canada over Hans Island. It is in the EU; however, many people in the country are regarded as ‘reluctant’ Europeans. A number of political parties such as Social Democrats, Liberal Party, Danish People’s Party, Social Liberal Party, Socialist People’s Party, Liberal Alliance, and Conservative People’s Party take part in the political process of the country; however, some of them are considered Euro-sceptics.
Economic factors affecting Denmark
The next element to address in the PESTEL analysis of Denmark is the economic environment. Denmark’s GDP in 2019 was worth $348.08 billion. However, it fell down by 6.9% in the second quarter of 2020 (Country Economy, 2020). This is clearly an impact of the turmoil that the global economy is experiencing currently.
Denmark’s economy is diverse and mostly based on service industries, trade, and manufacturing. The most notable industries are agriculture, tourism, energy, and transportation. Denmark’s key exports such as packaged medicaments, refined petroleum, meat, electric items, and cheese mostly go to Germany, Sweden, the USA, the UK, and Norway. On the other hand, its top imports such as cars, crude petroleum, passenger/cargo ships mostly come from Germany, Sweden, the Netherlands, China, and Norway (OEC, 2020)
Small enterprises play an important role in Danish economy. Likewise, a highly skilled and multilingual workforce, a flexible labour market, ultramodern infrastructure, and attractive tax incentives for companies are also very important factors behind the success of the economy (Nordea, 2020). However, a small domestic market, unsustainable wage increases, and financial pressures on public finances and welfare services are considered some of the challenges for the economy.
Social factors affecting Denmark
The Danish society is often depicted with values such as openness, trust, and a lack of corruption. Likewise, democratic traditions, a solid educational system, and a transparent tax system also speak volumes. However, the rise of right-wing forces, ageing population, expensive real estate, inequality, and integration of migrants and ethnic minorities into the labour market are some of the key challenges facing the society today.
The geographic size of Denmark is small, so is its population. The current population is estimated to be 5.8 million. Denmark’s major language is Danish, and Christianity is the major religion. Women seem to be living longer in the country as seen from the life expectancy of 81 years compared to 77 years for men (BBC, 2019). Many of the Danes prefer spending money on activities to buying things and are not much moved by new cars and designer products. This is an interesting feature of Danish social life. Indeed, Denmark is a great place to live!
Technological factors affecting Denmark
Denmark is undoubtedly one of those countries that are considered very advanced technologically. No doubt that advanced infrastructure has played a big role in technological development. The Internet service is very reliable and available throughout the country. No wonder why approximately 98% people use the Internet.
Facebook is the top social media destination in Denmark. Other notable social networking sites are Instagram and LinkedIn. The use of YouTube is great as well. Some of the top web-shops visited by Danes in recent years are Zalando.dk, H&M, Nemlig.com, Matas webshop, Coop.dk, Just-Eat, and Amazon (Statista, 2020). However, it should be mentioned that Denmark is facing shortage of skilled tech workers. Therefore, the government has taken initiatives to increase the number of science, technology, IT and mathematics graduates in the country.
Environmental factors affecting Denmark
Denmark is certainly one of the most beautiful countries in Europe. Its wide variety of landscapes, areas of natural beauty, cultural festivals, skiing and sailing facilities, and splendid visitor attractions mesmerise both locals and tourists. However, it is worth noting that Denmark faces some environmental problems e.g. air pollution, excessive noise, and pollution of rivers, lakes, and open sea by animal wastes and pesticides.
Legal factors affecting Denmark
The last factor to discuss in the PESTEL analysis of Denmark is the legal environment of the country. Danish law protects employees and workers in a variety of areas, e.g. working hours, leave, holiday entitlement, non-discrimination, contract of employment, and part-time work. Denmark encourages innovation and entrepreneurship.
However, it should be mentioned that if an individual is from outside the Nordic countries, EU/EEA and Switzerland, he/she must apply for a residence and work permit before start working on self-employment basis or setting up a company.
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Last update: 07 November 2020
BBC (2019) Denmark country profile, available at: https://www.bbc.co.uk/news/world-europe-17929661 (accessed 04 November 2020)
Country Economy (2020) Denmark GDP, available at: https://countryeconomy.com/gdp/denmark (accessed 03 November 2020)
Nordea (2020) Country profile Denmark, available at: https://www.nordeatrade.com/en/explore-new-market/denmark/investment (accessed 02 November 2020)
OEC (2020) Denmark, available at: https://oec.world/en/profile/country/dnk (accessed 04 November 2020)
Statista (2020) Ranking of the most often used webshops in Denmark from 2017 to 2020, available at: https://www.statista.com/statistics/668623/most-popular-webshops-in-denmark/ (accessed 05 November 2020)
Author: Joe David
Joe David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.