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Explain why an understanding of the environmental/external (PESTLE) factors is Important for all organizations
To run a successful business, it is very important to run a background check on the external environment of that particular industry. PESTLE analysis is widely used to investigate the Political, Economic, Social, Technological, Legal and Environmental influences under expanding businesses. It helps in decision-makings and also to become more aware of competitors move.
Political
Political factors affect companies in all type of industries and can have significant impact if change in government or policies occur. Changes in public spending or closing and opening of major businesses rely immensely on UK’s international relations with other countries. Eg: accession of new members like Poland can bring up new business opportunity and can have similar effects on the EU regulations. Legal changes are closely related to Political changes as Laws are frequently changed in a wide range of areas, Eg:
• Government type and stability
• Freedom of press, rule of law and levels of bureaucracy and corruption
• Regulation and de-regulation trends
• Social and employment legislation
• Tax policy, and trade and tariff controls
Economic
Economic changes are directly related to social changes. Business outcomes are associated with fluctuating economy with a series of general boom and downfalls. All businesses benefit during an economic boom and lose out during downfalls. Other changes in the economy such as changes in the interest rate, wage rates, and the rate of inflation (i.e. general increase in prices) directly affect outcomes of various industries. Businesses are always willing to take risks in order to expa...
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...eory/external-environment/pest-analysis.html#axzz2xmGA7LDr (accessed April 2014)
PEST analysis, 2013 [online] available at https://depts.washington.edu/oei/resources/toolsTemplates/PEST_analysis.pdf (accessed April 2014)
The Guardian, 2013 [online] ‘Hotel and restaurant boom helps economic recovery’ available at http://www.theguardian.com/business/2013/may/28/hotel-restaurant-boom-economic-recovery-cbi (accessed April 2014)
PEST [online] available at http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 (accessed April 2014)
Jais business blog [online] 2013, http://jaisbusinessblog.weebly.com/pest-analysis.html (accessed on April 2014)
Business week daily, [online] 2013, PEST analysis [online] available at http://www.businessnewsdaily.com/5512-pest-analysis-definition-examples-templates.html (accessed April 2014)
A PESTLE analysis is a macro environmental framework used to understand the impact of the external factors on the organization. PESTLE stands for "Political, Economic, Social, Technological, Legal and Environment” factors.
UK economy goes through difference series of pattern with booms to slumps. Every business does well in the time period of boom and most businesses collapse in the time period of slump or recession. Other economy changes that have influence on ASDA are interest rate, wage rate and inflation rate.
According to Gregory, the booming tourism industry has created a sieve for the rich and the poor. Its high returns are mostly enjoyed by the hotel and restaurant owners and
The state of the economy is important both on a micro and macroeconomic level. On a macro level, those in government pay close attention to these statistics in order to guide fiscal and monetary policy. On a micro level, households can use this data to guide their consumption and investments, while businesses can use this information in their strategic planning. In looking at economic information, there is current data, historical data, and economic forecasts. This enables decision makers to get a more complete picture of economic trends and see the relationship between various economic indicators.
Unstable economy – Economy changes constantly. Changes in interest rates, inflation and unemployment rates affect the demand of the product;
In this essay I will be discussing and critically analysing each element of the PESTLE analysis within the hospitality industry, with examples to reflect each point. Also this essay will discuss how marketers should adapt to changes in the macro-environment. The PESTLE analysis is a marketing principle used to understand the relation between a company and the external environment. Murray-Webster (2010:88) states PESTLE analysis will help to capture understanding about aspects of the context by using the prompt political, economic, sociological, technological, legal and environment.
which is under the conservative government. Economic factors changes include changes such as a recession creating activity at the lower end of the product price range. Also for instance the rate of interest rates rising depressing businesses. causing redundancies and lower spending levels. Social factors change include changing lifestyles and attitudes.
The deep analysis of the macro-environment is key to the organisations in order to understand which factors are impacting their operations. The main purpose of PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental) is to identify those factors that have an impact on the organisation but are outside its control area. Together with other frameworks (such as Porter’s ‘5 forces’), PESTLE framework is required to develop a comprehensive analytical strategic process.
Pestle analysis is the tool to analyze the external environment of the business. It takes the different factors according to which the opportunities and threats can be analyzed and the actions plan can be made.
The general economic environment: Current levels of interest and exchange rates as well as levels of investor confidence generally will have a major influence on the value of businesses and will therefore also affect the amount of goodwill attached to a business at any one time.
Economic factors affecting negative or positive way the companies. The inflation and currencies rates have big influence.
THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country's borders that much of the conflict in international business arises. Nations can and do abridge s...
The first step to doing an external analysis on General Electric is to conduct a PESTEL Analysis. PESTEL is an acronym for political, economic, sociocultural, technological, ecological, and legal factors affecting a company. Using the PESTEL model, it is easy to evaluate external factors that could possibly have an effect on the company.
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector:
Most of the time Legal ingredients are separated from the political ingredients mostly because of the growing legal influences external in the national political system, such as European and regional legislation (Strategy Survival Guide).