Pestle Analysis

PESTEL analysis of the macro-environment There argon umteen factors in the macro-environment that bequeath effect the decisions of the managers of any organisation. Tax agitates, sassy laws, trade barriers, demographic change and government policy changes argon all examples of macro change. To help dismember these factors managers can categorise them using the PESTEL model. This classification distinguishes between . Political factors. These confab to government policy much(prenominal)(prenominal) as the degree of intervention (interference) in the economy. What high-priceds and services does a government want to provide?To what extent does it retrieve in subsidizing (grants or loans) (buying) firms? What are its priorities in terms of business encourage? Political decisions can affect many important areas for business such as the education of the workforce, the health of the nation and the gauge of the infrastructure of the economy such as the road and rail system. .Eco nomic factors. These include interest rates, revenue enhancement changes, sparing offset, inflation ( expenditure rise) and exchange rates. As you will see economic change can slang a major trespass on a firms behaviour.For example -higher interest rates may stop enthronization because it costs more than to borrow? a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency? inflation may go across to higher wage aims from employees and raise costs -? higher national income growth may increase demand for a firms products . Social factors. Changes in amicable trends (fashion/lifestyle) can impact on the demand for a firms products and the availability and willingness of individuals to work.In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. It also means some firms such as Asda ha ve started to recruit older employees to tap into this growing labour pool. The ageing population also has impact on demand for example, demand for sheltered registration and medicines have increased whereas demand for toys is falling. .Technological factors saucy-sprung(prenominal) technologies create new products and new processes.MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided program are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. .Environmental factors environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance.With major climate changes occurring due to global heat ing system and with greater environmental awareness this external factor is becoming a important issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of crisscross cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. Legal factors these are related to the legal environment in which firms operate. In new-made years in the UK there have been many significant legal changes that have affected firms behaviour. The introduction of age distinction (discrimination definition where u make fun and not treat soulfulness right because of their background, colour, how they look or age) and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisations actions.Legal changes can affect a firms costs (e. g. if new systems and procedures have to be developed) and demand (e. g. if the law affects the likelihood of customers buying the good or using the service). . Different categories of law include .1) Consumer laws these are knowing to protect customers against unfair practices such as misleading descriptions of the product. .2) Competition laws these are aimed at protecting small firms against discrimination by larger firms and checking that customers are not exploited by firms with control and power . ) Employment laws these spoil areas such as redundancy, dismissal, working hours and minimum wages. They aim to protect employees against the demoralise of power by managers 4) Health and safety legislation these laws are aimed at ensuring the workplace is as safe as is reasonably practical. They cover issues such as training, reporting accidents and the appropriate provision of safety equipment. http//www. scribd. com/doc/16171096/PESTEL-Framework-and-Porters-Five-Forces-Model