PESTEL Analysis of the Macro-environment

significant this factor will be to the firm's planning.
It is also important when using PESTEL analysis to consider the level at which it is applied. When
analysing companies such as Sony, Chrysler, Coca Cola, BP and Disney it is important to remember
that they have many different parts to their overall business - they include many different divisions
and in some cases many different brands. Whilst it may be useful to consider the whole business
when using PESTEL in that it may highlight some important factors, managers may want to narrow
it down to a particular part of the business (e.g. a specific division of Sony); this may be more
useful because it will focus on the factors relevant to that part of the business. They may also want
to differentiate between factors which are very local, other which are national and those which are
global.
For example, a retailer undertaking PESTEL analysis may consider:
Local factors
such as planning permission and local economic growth rates
National factors
such as UK laws on retailer opening hours and trade descriptions legislation
and UK interest rates
Global factors
such as the opening up of new markets making trade easier. The entry of
Bulgaria and Rumania into the European Union might make it easier to enter that market in
terms of meeting the various regulations and provide new expansion opportunities. It might
also change the labour force within the UK and recruitment opportunities.
This version of PESTEL analysis is called LoNGPESTEL. This is illustrated below:
LOCAL NATIONAL GLOBAL
POLITICAL Provision of services by
local council
UK government policy
on subsidies
World trade
agreements e.g. further
expansion of the EU
ECONOMIC Local income UK interest rates Overseas economic
growth
SOCIAL Local population growth Demographic change
(e.g. ageing population)
Migration flows
TECHNOLOGICAL Improvements in local
technologies e.g.
availability of Digital TV
UK wide technology e.g.
UK online services
International
technological
breakthroughs e.g.
internet
ENVIRONMENTAL Local waste issues UK weather Global climate change
LEGAL Local licences/planning
permission
UK law International
agreements on human
rights or environmental
policy
In "Foundations of Economics" we focus on the economic environment. We examine issues such as
the effect of interest rate changes, changes in exchange rates, changes in trade policy, government
intervention in an economy via spending and taxation and economic growth rates. These can be
incredibly important factors in a firm's macro-environment. The growth of China and India, for
example, have had massive effects on many organisations. Firms can relocate production there to
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