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PESTEL

PESTEL. Environmental Analysis. P olitical E conomic S ocio-cultural T echnological Environmental Legal. Political. Government ownership of industries and attitude to monopolies and competition Taxation policy Foreign trade regulation Government stability

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PESTEL

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  1. PESTEL Claire Devlin

  2. Environmental Analysis • Political • Economic • Socio-cultural • Technological • Environmental • Legal Claire Devlin

  3. Political • Government ownership of industries and attitude to monopolies and competition • Taxation policy • Foreign trade regulation • Government stability • Political parties and alignments at local national and European level Claire Devlin

  4. Economic Factors • Business cycles • GNP trends • Interest rates • Unemployment • Energy factors • Currency fluctuations and exchange rates • Inflation • Consumer expenditure and disposable income Claire Devlin

  5. Socio-cultural factors • Attitudes to work and leisure • Demographic change • Income distribution • Social mobility • Lifestyle • Consumerism • Health and education Claire Devlin

  6. Technological • Government spending on research • Industry spending on research • New developments or discoveries • New services, products and ideas • Speed of technology transfer • Internet availability • Telecommunication infrastructure • Degree of competition Claire Devlin

  7. Environmental • Green issues that affect the environment • Level and type of energy consumed • Renewable energy • Rubbish waste and its disposal Claire Devlin

  8. Legal • Competition and government policy • Employment and safety law • Product safety issues Claire Devlin

  9. Environmental Analysis • A strategic planning system interacts with the environment, especially those factors that have actual or potential impacts on the organisation • Environmental forces impact on business in different ways and with different degrees of strength Claire Devlin

  10. Basis of effective PESTEL analysis • A PESTEL analysis should not result in a long list of factors • It should concentrate on the key issues relating to the industry or firm Claire Devlin

  11. Basis of effective PESTEL analysis Strategic issues that will impact on the firm. • A change in the law. The tariff on plastic bags has affected the companies that makes them • A change in technology: such as development of a hard plastic to replace metal components Claire Devlin

  12. Basis of effective PESTEL analysis Trends • Need to look at factors that will affect the firm, • Ageing populations, • Rise in energy costs • Restrictions on waste Claire Devlin

  13. Basis of effective PESTEL analysis Patterns Clusters of related activitiesthat change the behaviour of the target market. These are most often seen in life-style models such as the “Yuppie” phenomenon of a few years ago Claire Devlin

  14. Basis of effective PESTEL analysis Projections and forecasts • Some demographic trends are well understood. Rise of the affluent grey market resulting from early retirement and home ownership • Trying to predict behaviour in the green environmental market more difficult since it is a life style choice and is erratic and unstable Claire Devlin

  15. Basis of effective PESTEL analysis Changes • Unexplained or sudden changes in trends. Each warrants further study to see if it is a “one off” or the start of a strategic issue. e.g., • Texting on mobile phones • Rise in alcopops • Atkins diet Claire Devlin

  16. Applications of PEST model Apply PEST factors to recent developments in: • public houses • the grocery retail trade • the mobile phone industry Claire Devlin

  17. Application of PEST model to Public Houses • Political: smoking ban, introduction of identity cards • Economic: rise in disposable incomes • Social/cultural:alcopops introduced for younger drinkers. The switch from brown to white spirits • Technological: wide use of TV for matches Claire Devlin

  18. Applications of PEST model to The grocery retail trade • P Regulations concerning under-cost selling • E Rise in incomes which allowed Lidl to enter market unnoticed. Fall in incomes leading to stealing market share • S Choice of sites for Lidl. Growth in petrol station forecourt shops to accommodate fast pace of life • T Use of loyalty cards to build up customer profile Claire Devlin

  19. The grocery retail trade Political • More info on products • Selling certain % of Irish goods • Minimum wage • Competition regulation Claire Devlin

  20. The grocery retail trade Economic • More money to spend • Inflation • Rising incomes allowed Lidl to enter market unnoticed Claire Devlin

  21. The grocery retail trade Socio cultural • More women working/convenience food • Consumers more informed • Bigger range of products/ more ethnic products • Differently priced supermarkets aiming at different market segments Claire Devlin

  22. The grocery retail trade Technological • On line Tesco • Scanning automatically • Loyalty cards Claire Devlin

  23. Application of PEST model to the mobile phone industry • Pgranting of licences for 3G phones too expensive (governments have a monopoly) • E increase in disposable incomes. Texting seen as cheaper and more efficient option • S young people create Texting themselves. Mobile phone seen as indispensable in a busy world. Tariffs on pre-paid phones • T predictive text, colour screens, cameras, new 3 G phones Claire Devlin

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