PESTLE Analysis

PESTLE Analysis

PESTLE Analysis

1. Purpose of PESTLE Analysis

The purpose of PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental) is to study and evaluate the variables of the external environment in which the company operates or will operate.

1.1 The “P” (Political Aspects)

To define the strategy of the company must be aware of the political environment in which it will act. Political factors include policy and structure for the collection of taxes, labor laws, political stability, environmental regulations, efficiency and effectiveness of the legal system, tariff restrictions to foreign trade, tax incentives, levels of corruption, regulatory frameworks etc.

1.2 The “E” (Economic Aspects)

Economic stability is a key point that can develop realistic scenarios and strategies that are enforceable. Some points to note include economic stability, economic growth, interest rates and the supply of capital, inflation rates and exchange rates with major currencies among others.

In this analysis it should be noted that not only the static numbers are important, but also the trends, i.e., the analysis of time variations (differences/bands), stability and the tendency of these numbers.

1.3 The “S” (Social-Cultural Aspects)

The society and local culture have great influence in management and business development; thus, its analysis is also essential. Different societies have different ways to develop the business. The social aspects would include the growth rate of population, age distribution, consumer behavior, the religious, cultural and educational aspects etc.

1.4 The “T” (Technological Aspects)

Today, a key factor is the technological perspective in any line of business. Therefore, businesses put great emphasize upon the incorporation and advancement of technology. Some technological factors to consider - depending on the type of business - include distribution channels and communication, incentives for development or use of technology, automation, levels of local production, stage local level technological issues related to environmental responsibility etc.

1.5 The “L” (Legal Aspects)

Businesses also pay huge importance to the legal factors, which include the existing and impending legislations, which can directly or indirectly affect the business. The factors that are put under legal consideration include employee welfare, waste management, taxation of earning and investment, excise duties and customer safety and protection (Khan, 2011, pp. n.d.).

1.6 The “E” (Environmental Aspects)

Environmental factors simple includes challenges and opportunities associated with environment, which include climate, weather, social and cultural environment. These aspects can have a direct impact upon the business performance, such as tourism, agriculture or insurance.

2. Trend Forecast till 2016

In this section of the paper, a trend forecast for one aspect of each PESTLE factor is put under consideration and evaluated on a timeline till 2016. For each factor, the trend forecast is given as follows;

2.1 Political Trend

One major aspect of political trend is the level of corruption. The previous trend has demonstrated that with the decreasing economic condition of the country, the level of corruption is increasing inverse proportionally. Thus, by 2016, it is forecasted that the level of corruption in business operation would definitely increase to a notable extent.

2.2 Economical Trend

Inflation is considerably amongst the most important aspects in ...