PESTEL analysis of the macro-environment
There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model. This classification distinguishes between:
• Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
• Economic factors. These include interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behaviour. For example: - higher interest rates may deter investment because it costs more to borrow …show more content…
When analysing companies such as Sony, Chrysler, Coca Cola, BP and Disney it is important to remember that they have many different parts to their overall business - they include many different divisions and in some cases many different brands. Whilst it may be useful to consider the whole business when using PESTEL in that it may highlight some important factors, managers may want to narrow it down to a particular part of the business (e.g. a specific division of Sony); this may be more useful because it will focus on the factors relevant to that part of the business. They may also want to differentiate between factors which are very local, other which are national and those which are …show more content…
further expansion of the EU
ECONOMIC Local income UK interest rates Overseas economic growth
SOCIAL Local population growth Demographic change (e.g. ageing population) Migration flows
TECHNOLOGICAL Improvements in local technologies e.g. availability of Digital TV UK wide technology e.g. UK online services International technological breakthroughs e.g. internet
ENVIRONMENTAL Local waste issues UK weather Global climate change
LEGAL Local licences/planning permission UK law International agreements on human rights or environmental
There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model. This classification distinguishes between:
• Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
• Economic factors. These include interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behaviour. For example: - higher interest rates may deter investment because it costs more to borrow …show more content…
When analysing companies such as Sony, Chrysler, Coca Cola, BP and Disney it is important to remember that they have many different parts to their overall business - they include many different divisions and in some cases many different brands. Whilst it may be useful to consider the whole business when using PESTEL in that it may highlight some important factors, managers may want to narrow it down to a particular part of the business (e.g. a specific division of Sony); this may be more useful because it will focus on the factors relevant to that part of the business. They may also want to differentiate between factors which are very local, other which are national and those which are …show more content…
further expansion of the EU
ECONOMIC Local income UK interest rates Overseas economic growth
SOCIAL Local population growth Demographic change (e.g. ageing population) Migration flows
TECHNOLOGICAL Improvements in local technologies e.g. availability of Digital TV UK wide technology e.g. UK online services International technological breakthroughs e.g. internet
ENVIRONMENTAL Local waste issues UK weather Global climate change
LEGAL Local licences/planning permission UK law International agreements on human rights or environmental