If we want to analyze our business correctly, we have to understand the analyzing process. When you come to understand the analyzing process, you can see some beautiful models. This model name is the business model, strategic model, strategic management model, etc. However, there is described as the PEST model or the PESTLE Analysis Example.
Table of Contents
- 1 PEST Analysis Example
- 2 PESTLE Analysis Example
- 3 PESTLED Model
- 3.1 1. Political Environment:
- 3.2 2. Economic Environment:
- 3.3 3. Socio-cultural Environment:
- 3.4 4. Technological Environment:
- 3.5 5. Legal Environment:
- 3.6 6. Natural Environment:
- 3.7 7. Demographic Environment:
- 4 Advantages of PESTEL Analysis
PEST Analysis Example
The PEST model for identifying and analyzing the factors in the general environment. It covers political, economic, socio-cultural, and technological. The PEST model is the previous situation of the PEST PESTLE Analysis example.
PESTLE Analysis Example
The PESTLE Analysis Example extends the version of the PEST model. The PESTLE Analysis Example covers political, economic, socio-cultural, technological, legal, and environmental (natural).
The PESTLED Model consists of PEST Analysis, PESTLE Analysis, and added other factors. The PESTLED Model covers the seven elements. Such as:-
- Environmental (natural), and
However, there is described the PESTLE Analysis Example and its factors.
1. Political Environment:
Political is the first one of the PESTLE analysis examples for business. The government of a country intervenes in the national economy by setting policies or rules for business. In our country, we see many such systems, such as import policy, export policy, taxation policy, and investment policy. Furthermore, drug policy, competition policy, consumer protection policy, etc. Sometimes, the government pursues a nationalization policy for state ownership of the business. Several countries, for example, India, chase state-driven mercantilism to increase exports and reduce imports. Some countries have liberalized their economy and shifted from a centrally managed economy to a capitalist economy or welfare economy.
In Bangladesh, the succeeding governments are highlighting more on denationalization rather than on national proprietorship. As global competition has increased, the government has also liberalized its trade policies to align with the WTO agreements. Another important issue is political stability that affects the operations of business firms substantially. Even the decision about investment is highly affected by political stability. In Bangladesh, we have seen how political instability has affected investment and trading in the country. In many other countries, also, political instability or political disturbances substantially affected businesses. Such as:-
- Sri Lanka (the civil war with LTTE),
- Nepal (mass upsurge by the Maoist activists),
- Afghanistan and Pakistan (terrorist activities), and
- Argentina (default in international debt).
Additionally, government agencies and pressure groups are also exercising influences on firms’ business operations that have a political character. Managers or managers must be capable of recognizing the implications of the actions of these groups and agencies. Governmental agencies include different bodies, for example, particular ministries, CCI&E, Board of Investment, NBR, etc. Pressure groups comprise the Consumers Association of Bangladesh, numerous Employers’ Associations, Chambers of Commerce and Industry, and the like. Since the pressure groups set limits on the commercial managers, supervisors should have vibrant thoughts about these groups’ activities.
2. Economic Environment:
Another PESTLE analysis example is economical. A country’s economic well-being affects market attractiveness. Some economic variables are related to determining the business prospects. There is thus a need to analyze the economic environment prudently by the business firms. The economic environment comprises a distinct variable with which management must be concerned. The economic country can be in circumstances of recession or boom or be in a state of changeability. Strategy-makers/Managers must have the capability to forecast the state-owned of the economy. The enactment of business establishment impactু by the fitness of a state’s economy. It permits the obligation of reviewing the economic environment to detect trends, changes, and their strategic implications.
When the force on the PESTLE analysis example for business, business establishments activate their businesses in marketplaces comprising persons. These individuals are likely to become consumers when they have buying control. And purchasing power depends on income, prices, savings debt, and the availability of credit. For that reason, business establishments must pay consideration to the revenue and ingesting outlines of the consumers. However, all the economic variables must treat holistically for the clear envisioning of the entire economy and market.
3. Socio-cultural Environment:
Socio-cultural is the most important one of PESTLE analysis examples for business. Its forces contain lifestyle changes, culture, social mobility, attitudes towards technology, and people’s beliefs, opinion, values, etc. These forces command a particular set of attitudes and values with resultant lifestyles. A society’s attitudes and values form the keystone of culture. They often drive other conditions and changes. The demand for products changes with the changes in social attitudes.
4. Technological Environment:
One PESTLE analysis example is technology. Socio-cultural factors differ across countries. In numerous states, worker variety is now a common occurrence. In some countries, we find the increasing lifespan of the population, a trend toward fewer children, movement of people from rural areas to urban areas, increasing rate of female education, the entrance of more and more women into the typical personnel, etc. All these have a main consequence on a country’s communal character and health. Consequently, it is very significant for managers of commercial establishments to study. Also, it forecasts the influence of cultural and social changes on the upcoming business actions in terms of conference consumer interest and needs. Business organizations must provide proposal goods in the society that resemble their attitudes and values.
In accordance with the PESTLE analysis example, dimensions of technology include the internet, information technology, global transfer of technology, biotechnology, and so forth. None can reject the point that the pace of alteration in these dimensions of technology is tremendously fast. Technological changes substantially affect the firm’s operations in many ways. The advancement of industrialization in any country depends mostly on the technological environment. Technology has the main influences on merchandise development, potential competition, and manufacturing efficiencies. The business establishments that face difficulties with unstable or changing technology are always in problems in terms of expectedness than those with steady technologies. The special effects of technological changes happen principally through new materials, processes, and products. An entire industry may be transformed or revitalized due to the use of modern technology.
Strategy formulation links to technological changes. And the intelligent response to the ever-increasing technological advances should be entrepreneurial rather than reactive. Strategic managers need to monitor developments in technology for their particular industry when formulating the strategy. A rapid and thorough analysis of technological changes aids managers attain a higher market portion because of initial acceptance of the new technology. A business must be conscious of technical changes to escape uselessness and encourage innovation. It means that plan managers of an organization must be skillful in technological predicting. Technological forecasting can protect and improve the profitability of rims in growing industries.
5. Legal Environment:
Legality may be an essential PESTLE analysis example for business. The legal environment contains rules and supervisory agenda in a country. Several laws legalize the business actions of creativities such as the Factories Act, the Labor Code, Industrial Relations Ordinance, and the Company law and the Contract Act, to name a few. Business laws mainly defend companies from biased competition and also shield customers from biased business practices. Business laws also protect society at large. The laws regarding the merger, acquisitions, industry regulation, employment conditions, unionization, workmen’s compensation, and the like affect a firm’s strategy. Straight globalization has instigated essential consequences on the legal environment. Thus, the business managers must have thorough knowledge about the significant laws that protect the business enterprises, consumers, and society.
6. Natural Environment:
Natural force is a vital force of PESTLE analysis example in management. Strategy-makers requisite to examine the trends in the natural environment of the country. In where it is operating its business. The most relevant matters in the natural environment that strategy-makers should deliberately embrace the accessibility of raw materials and additional inputs, levels of environmental pollution, changes in the cost of energy, and the changing role of government in environmental protection. Changes in a physical or natural environment, such as global warming, will massively affect our daily lives and our organizations’ functioning with a variety of consequences.
7. Demographic Environment:
Sometimes, demographics attaches with PESTLE analysis example for business. The demographic environment is concerned with a country’s pollution. Specifically, it is related to the population’s size, age structure, geographic distribution, ethnic mix, and income distribution. With over six billion population, demographic changes are evident all over the world. In several countries, there is undesirable population growth. Pairs are around fewer than two children in various countries. In general, the average age is increasing. In many states, rural-urban migration is rampant. These trends suggest numerous opportunities for firms to develop products and services to meet the needs of diversified groups of people in society. Strategy-makers must create a study of the demographic subjects, particularly, extent and growing amount of things. These are population, age circulation, ethnic mixture, household patterns, educational level, and inter-regional activities.
Advantages of PESTEL Analysis
There have included the essential benefits of PESTLE analysis. Such a:
- Alertness Development: PESTLE analysis aids companies get ready for potential threats, which get up from time to time due to external factors. For example, for a mobile built-up company, any change in technology like the modernization in mobile sorts is a threat if a firm does not feel for the innovation changes in their mobile brand. From this time, they will lose the marketplace stake to their opponents.
- Cost-Effectiveness: Time and effort are the only cost of PESTLE analysis. Additionally, specific extra programs are also there, which can help in forming contributions and reactions.
- Exploit Opportunities: It benefits in manipulating chances that stand up from time to time due to exterior issues. For say, the Minor interest proportion in the real estate business is a financial feature. That makes an opportunity for the growing demand for housing, as housing loans get inexpensive due to a worse interest rate.
- Deeper Understanding: The PESTLE analysis’s best object is that it creates easy to realize the aspects that touch the business situation. When it originates to a fresh product’s progress, its growths strategically thoughtful and deeper accepting of numerous factors, for instance, consumer laws, modern technological styles, etc., which shake the product take-off in the market.
We can also say that all of the upstairs external environmental issues are consistent under the PESTLE analysis example for business. Therefore, strategy-makers need to analyze all of them in an interrelated fashion to understand. And It needs to visualize the whole of the environment.
A PESTLE analysis is a tool used to gain a macro picture of an industry environment. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors. It allows a company to form an impression of the factors that might impact a new business or industry.Which company uses PESTLE analysis? ›
The PESTLE analysis of the companies has been done in this context for multinational companies such as Samsung, Starbucks, and Pfizer. Samsung operates its business in the field of electronic goods and it is one of the leading brands of the world.What are examples of political factors? ›
Political factors include government policies, leadership, and change; foreign trade policies; internal political issues and trends; tax policy; regulation and de-regulation trends.What are the 6 PESTLE factors? ›
In particular, PESTEL reflects the names of the six segments of the general environment: (1) political, (2) economic, (3) social, (4) technological, (5) environmental, and (6) legal.What are the economic factors affecting business environment? ›
- Interest rates.
- Tax rates.
- Currency exchange rate.
- Saving rates.
- Consumer confidence levels.
1. Political factors in PESTLE Analysis. Political factors include tax policy, environmental regulations, trade restrictions and reform, tariffs, and also political stability. These factors determine the extent to which a government may influence an industry or a company.How do you write a PEST analysis? ›
- Identify the political factors. Conduct internal research to identify what types of laws or policies affect you. ...
- Identify the economic factors. Determine which economic factors will affect your business. ...
- Identify the social factors. ...
- Identify the technological factors.
PESTLE helps you to analyse external factors which can affect your business. The six factors are: political, economic, social, technological, legal or environmental. With a clear overview of these factors you can better understand the position and potential of your business in the market.How can political affect the business? ›
Governments can raise or lower corporation tax , which will impact on profits. They can also affect businesses by increasing value-added tax on products or business rates. They can bring in new laws like the National Minimum Wage , which impacts on profits and employment rights.What is Pestel analysis essay? ›
What is a PESTEL analysis? A PESTEL analysis is an acronym for a tool used to identify the macro (external) forces facing an organisation. The letters stand for Political, Economic, Social, Technological, Environmental and Legal.
Doing a PESTEL analysis helps you to look at all important factors. that might affect the success or failure of your project. PESTEL is an acronym for the following factors (Political, Economic, Social and cultural, Technological, Environment and Legal)What are economic factors in pestle? ›
Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns etc. It also accounts for the FDI (foreign direct investment) depending on certain specific industries who're undergoing this analysis. Example Index Terms – Ownership Changes, Bankruptcy, Company Relocations.