APPLIED ECONOMICS

GROUP 2
PESTLE
/
PESTEL
Political, Economic,
Social, Technology,
Legal, Environment
 What is the PESTLE /
PESTEL Analysis?
A PESTLE analysis is a management framework and
diagnostic tool. The outcome of the analysis will help you to
understand factors external to your organization which can
impact upon strategy and influence business decisions.
In marketing, before any kind of strategy or tactical plan can
be implemented, it is fundamental to conduct a full
situational analysis. This analysis should be repeated every
six months to identify any changes in the macro-environment.
Organizations that successfully monitor and respond to
changes in the macro-environment can differentiate from the
competition and thus have a competitive advantage over
others.
SWOT Vs. The main differences between a SWOT or PESTLE
analysis are that a SWOT analysis focuses on actions you
PESTLE can take INTERNAL to your business environment, a
PESTLE analysis identifies EXTERNAL factors that are
mainly outside of your control.
PESTLE/ PESTEL Analysis
PESTLE/PESTEL reveals opportunities
and threats better than SWOT, the
direction of the business change, projects
that will fail beyond your control, and
country, region, and market issues through
helping you create an objective view. The
following should be taken into
consideration in the conduct of PESTLE
Analysis.
Political Factors
These includes government tax policies and
regulation; it may increase the tax rate in a
State and Country that may affect business.
Government laws on competition in the
marketplace is another political factor, i.e.,
provide incentives to growing businesses
and cut down incentives to regular business
like yours.
 Is there any expected elections on
State and National Level and how
These it shifts government policies?
Who are the upcoming
questions contenders for power? What
is their plan for business
can help policy and regulation?
contribute What is the current and
impending legislative
to this changes?
factor What are the other
political factors and
when they might change?
Economic Factors
Economic factors will include
exchange rates, economic growth
or decline, globalization, inflation,
interest rates and the cost of
living, labour costs and consumer
spending.
 • What is the current disposable income of
customer and how it can change in the
These upcoming years?
• Currently, the economy is stable or not. It
questions is a growing economy, declining and a

can help stagnating economy

• Whether the exchange rate is stable or not.
contribute What is the tendency of fluctuation?

to this • What are the prevailing criteria of credit

availability, how the credit criteria affects
factor the business?
• What is the prevailing unemployment rate?
Will it be easy to hire the desired staff
required?
Social Factors
Social factors look at trends such as
lifestyle factors, cultural norms and
expectations such as career attitudes
and work-life balance. It also concerns
itself with consumer tastes and buying
habits as well as population
demographics.
 • Do you know about the overall population,
there is a growth or contraction in the
population you are operating?
These • Know about social attitudes that might affect
your business. Are there any noticeable socio-
questions cultural changes in the environment?
• What is the level of education and health in the
can help society you are operating in? Are there any

contribute changes in these external environment factors,

and how it affects you?
to this • What are the religious beliefs and how it affects
your business environment?
factor • What is the trend in overall society habits
about saving, investments, and spending?
• Do you know any other social factors that
might affect your business?
Technological Factors
Technology has grown exponentially. How is
your business responding to technological
innovation in your products and services?
Other technological advancements will impact
on data storage, disruptive technologies such as
smartphones, social networking, automation
robotics and the increasing shift towards AI
artificial intelligence?
 • Are there any innovative technologies
your business could use?
These • If you access new technology, how it
questions benefits you by redefining your product
or cut costs. Etc.?
can help • How changing technology affect your
contribute customer base?
to this • What technologies your competitor is
factor using that positively affect their
products and services?
• What other technological factors you
should consider?
Porter’s Five Forces
This tool helps you understand where your
business power lies in present competitiveness
and future positioning strength. It forces you to
analyze suppliers and customers’ bargaining
powers, the threats to new entrants and
substitutes, and competitive rivalry in your
marketplace. Using this tool helps understand
the balance of power and to identify areas of
potential profitability. According to Porter, this
model should be used at the line of business
level.
QUIZ!
1. The outcome of this analysis will help you understand the
macro-environmental factors in your organization.

a.SWOT Analysis
b.PESTEL Analysis
c.Porter’s Five Forces
d.Political Factors
2. This analysis focuses on actions internal to your business
environment.

a.SWOT Analysis
b.PESTEL Analysis
c.Porter’s Five Forces
d.Political Factors
3. Which of the following does not belong to the group?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Strength Factors
4. Which factor does the question “Do you know about the
overall population, there is a growth or contraction in the
population you are operating?” belong to?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Economic Factors
5. Which factor does the question “If you access new
technology, how it benefits you by redefining your product
or cut costs. Etc.?” belong to?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Economic Factors
6. Which factor does the question “Who are the upcoming
contenders for power? What is their plan for business policy
and regulation?” belong to?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Economic Factors
7. Which factor does the question “Whether the exchange
rate is stable or not. What is the tendency of fluctuation?”
belong to?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Economic Factors
8. Which factor does the question “What are the prevailing
criteria of credit availability, how the credit criteria affects
the business?” belong to?

a.Political Factors
b.Technological Factors
c.Social Factors
d.Economic Factors
9. This tool helps you understand where your business
power lies in present competitiveness and future positioning
strength.

a.SWOT Analysis
b.PESTEL Analysis
c.Porter’s Five Forces
d.Political Factors
10. It forces you to analyze suppliers and customers’
bargaining powers, the threats to new entrants and
substitutes, and competitive rivalry in your marketplace.

a.SWOT Analysis
b.PESTEL Analysis
c.Porter’s Five Forces
d.Political Factors
ANSWER KEY :>

1. B 6. A
2. A 7. D
3. D 8. D
4. C 9. C
5. B 10. C