STRATEGY

Competitive Strategy

Abstract

This paper looks at the Political, Economic, Social, Technological, Environmental and Legal analysis on the macroeconomic environment and sees it impact on the world affairs. The paper covers each element of the PESTEL analysis and looks at it in detail. The paper then looks at the details of each of the factors and how it affects the environment and how the changes have taken place in the world.

Competitive Strategy

Introduction

World affairs are affected by many factors, these include tax reforms. Changes in laws and imposition of trade barriers, changes in demographics and government policies. The PESTEL (Political, Economic, Social, Technological, Environmental and Legal) analysis assists in developing a better understanding of these changes. These factors are in the macro-environment that is dynamic and ever changing. Anticipating these changes cannot be accurate but there could be a close estimate of what the world will be like in the future. The calculation of these changes help businesses across the world develop their strategy and adapt to these changes. It is important to study the changes in the microenvironment as all businesses share a common environment.

The factors are defined as follows.

Political Factors

These factors are the policies of the government whether it is a socialist or free market economy. How strong is the political setup in a country, what are the threats that the establishment faces (Regan & Henderson, 2002, pp.119-136). For Example in Egypt a rebel against the rulers of the state brought about a significant change in the politics of the world. The political party that rules the country determines the major decision of the economy regarding fiscal and monetary policies. The relation of the country with its neighboring territories is also an important factor. The government establishes the policies and frameworks for its people to follow. The policies of the government are an important indicator of the future strategy that a business needs to follow.

Economic Factors

This includes the factors such as the interest rates, tax reforms, growth in Gross Domestic Product, inflation level and rate of exchange. These factors can change with the increase in demand or recession in the economy. Many economies around the world are inter-related related and the state of one economy can influence the state of another (Castells, 2000, pp.5-24). Economic factors can differ for business to business for example a monopoly will not be affected by inflation as price is not a factor that affects the demand for its product.

Social Factors

Change in social trends affects the world in major ways. In some countries the youth is the majority of the population whereas in other countries it's the other way round. The change in the way the society interacts like increase in use of mobile phones and social media is what accounts for social factors. The overall demand for products and services in the economy would be different with population dynamics. A country with a younger population would have a larger pool of workers and the goods and services produced by the country ...