Pestel: Market Growth or Decline, Business Position, Potential and Direction For Operations

PESTEL Overview
‘PEST analysis is a critical strategic tool for understanding

market growth or decline, business position, potential and
direction for operations
PEST analysis looks at the external business environment and

is an appropriate strategic tool for understanding the
"big picture" of the environment in which business operates,
enabling the company to take advantage of the opportunities
and minimize the threats faced by their business activities
1. Visual Analogy:
‘Defining current position and direction’

2. PESTEL Applications:
• a company looking at its market

• a product looking at its market
• a brand in relation to its market
• entering a new market or launching a new product
• a potential acquisition
• a potential partnership
• an investment opportunity
3. PESTEL Segmentation:
In conducting PEST analysis, it is required to consider each PEST factor as
they all play a part in determining the overall business environment.
Political: : elections, employment law, consumer protection, environmental regulations,

industry-specific regulations,
competitive regulations, inter-country relationships/attitudes, war, terrorism,
political trends, governmental leadership, taxes, and government structure
Economic: economic growth trends (various countries), taxation, government

spending levels, disposable income, job growth/unemployment, exchange rates,
Tariffs, inflation, consumer confidence index, import/export ratios, and
production levels.
PESTEL analysis incorporates six perspectives, which give a logical structure, and clear
delineation for proactive decision-making
Socio - Cultural: demographics (age, gender, race, family size, etc.), lifestyle changes,
population shifts, education, trends, fads, diversity, immigration/emigration, health,
living standards, housing trends, fashion, attitudes to work, leisure activities,
occupations, and earning capacity. Cultural trends in Art, Architecture, Design, Film,
Music
Technological: inventions, new discoveries, research, energy uses/sources/fuels,

communications, rates of obsolescence, health (pharmaceutical, equipment, etc.),
manufacturing advances, information technology, internet, transportation, bio-tech,
genetics, agri-tech, waste removal/recycling.
To move from a static to a dynamic system, it is essential to create connections between
the sectors and individual factors
Environmental weather and climate change. Changes in temperature can impact on raw
material costs, farming, tourism etc. Major climate changes occurring due to global
warming . The growing desire to protect the environment is having an impact on many
industries such as the travel and transportation industries (for example, more taxes
being placed on air travel and the success of hybrid cars) and the general move towards
more environmentally friendly products and processes is affecting demand patterns and
creating business opportunities.
Legal: age discrimination and disability discrimination legislation, an increase in the

minimum wage and greater requirements for firms to recycle are examples of relatively
recent laws that affect an organisation's actions. Legal changes can affect a firm's costs
(e.g. if new systems and procedures have to be developed) and demand (e.g. if the law
affects the likelihood of customers buying the good or using the service).
PESTEL is not a set of rigid compartments into which ideas need
to be sorted. It is better thought of as a set of hooks that can be
used to fish for important facts. Once the factors have been
"fished out", it does not matter which hook they were attached
to.
PESTEL
Strategic Development Framework

CAMELOT
The Presidency of John F Kennedy - 1000 day reign that changed the political and cultural landscape of a nation
When John F. Kennedy was elected to the White House in November 1960...The
American people embarked on a thousand-day journey to a mythical land. Now
remembered as Camelot, a metaphoric equivalent of King Arthur's Court, Kennedy's
presidency placed him and his young family at the center of the world's stage. There
they helped inspire a cultural reassessment of the American way of life.
Alliance for Progress The New Frontier

5 FORCES
PESTEL
MARKETIN SWOT
G
MIX

The New Frontier
Strategic Development Overview

PESTEL / SWOT
• A PESTEL analysis most commonly measures a market

It is a useful strategic tool for understanding market growth or decline,
business position, potential and direction for operations.
• A SWOT analysis measures a proposition or idea.

Data from an environmental analysis (PESTEL) is separate it into internal
(strengths and weaknesses) and external issues (opportunities and threats)

Overview
POLITICAL
These relate to the degree and extent of the Government’s intervention in theEconomy.
nt laws3. Environmental regulations4. Trade restrictions and tariffs5. Political
PESTEL
PESTEL
Overview
ECONOMIC
These have major impacts on how businesses operate and make decisions.
The following are examples of factors in the macro economy:
Examples include;
1. Economic growth / GDP

2. Interest rates
3. Exchange rates
4. Inflation rate

Overview
SOCIO-CULTURAL
al and cultural scenario of a country or specific period of time
he business to a large extent. It is very important that thesefactors are considered. Examples include
1. Local demographics
2. Lifestyle changes
3. Consumerism
4. Changes to family structure
5. Social networking
6. Emerging Cultural trends

TECHNOLOGICAL
Technology is vital for competitive advantage, and is a major driver of
globalization. Furthermore, technological shifts can affect costs,
quality, and lead to innovation. Examples include:
1. R&D activity,

2. Rate of technological change
3. Rate of adoption
Effects
ENVIRONMENTAL
With major climate changes occurring due to global warming and with greater
environmental awareness this external factor is becoming a significant issue
for firms to consider. Examples include:
1. Does the idea, service or product embrace environmental issues
2. Is the idea, service or product sustainable
3. How is distribution changed by new technologies e.g. Internet,

mobile phone, PDA etc
4. Does technology offer companies a new way to communicatewith consumers
LEGAL / LITIGATION
• Copyright
• Patent creation
• Protecting your business
• Protecting your data
PESTEL Cluster Analysis
PESTEL Idea Development
PESTEL Map: Socio-Cultural 1
SWOT Analysis
(Defining the strengths and weaknesses of the idea)
5. FORCE INITIAL ANALYSIS
5 FORCES OVERVIEW
6. MARKETING MIX INITIAL ANALYSIS

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PESTEL Overview

‘PEST analysis is a critical strategic tool for understanding

PEST analysis looks at the external business environment and

‘Defining current position and direction’

• a company looking at its market

Political: : elections, employment law, consumer protection, environmental regulations,

Economic: economic growth trends (various countries), taxation, government

Technological: inventions, new discoveries, research, energy uses/sources/fuels,

Legal: age discrimination and disability discrimination legislation, an increase in the

Strategic Development Framework

Alliance for Progress The New Frontier

Strategic Development Framework

Strategic Development Framework

• A PESTEL analysis most commonly measures a market

• A SWOT analysis measures a proposition or idea.

Strategic Development Framework

nt laws3. Environmental regulations4. Trade restrictions and tariffs5. Political

1. Economic growth / GDP

1. R&D activity,

1. Does the idea, service or product embrace environmental issues

2. Is the idea, service or product sustainable

3. How is distribution changed by new technologies e.g. Internet,

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