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Question 1

state the 6 elements of PESTEL analysis.

Answer 1

Political
Economic
Social
Technological
Environmental
Legal

Question 2

what does the political element of PESTEL analysis include?

Answer 2

government policies, regulations, trade agreements, tax policies & political stability affecting business operations

Question 3

what does the economic element of PESTEL analysis include?

Answer 3

economic factors eg. inflation, exchange rates, interest rates, wcon growth, unemployment rates & consumer spending

Question 4

what does the social element of PESTEL analysis include?

Answer 4

societal trends, demographics, cultural attitudes, lifestyle changes & consumer preferences

Question 5

what does the technological element of PESTEL analysis include?

Answer 5

technological advancements, innovation, automation, R&D activity, impact of tech on production and communication

Question 6

what does the environmental element of PESTEL analysis include?

Answer 6

environmental factors eg. climate change, sustainability, waste management and regulations on environmental impact

Question 7

what is porters diamond model?

Answer 7

identifies why particular nations enjoy sustained competitive advantage in particular products

Question 8

what are the 4 factors of porters diamond model?

Answer 8

• factor conditions
• demand conditions
• related & supporting industries
• firm strategy, structure & rivalry

Question 9

what does factor conditions refer to in porters diamond model?

Answer 9

includes resources like land, skills & infrastructure. disadvantages can drive innovation.

Question 10

what does demand conditions refer to in porters diamond model?

Answer 10

strong home market demand pushes industries to innovate and excel

Question 11

what does related and supporting industries refer to in porters diamond model?

Answer 11

success is supported by strong supplier networks and related industries

Question 11

give criticisms of porters diamond model.

Answer 11

• developed model by looking at 10 developed countries - model only really applies to developed economies
• argues that inbound FDI does not increase domestic comp significantly as domestic firms lack capability to defend own markets
• doesnt address role of MNCs
• seem to be ample evidence that diamond is influenced by factors outside home country
• focused on manufacturers, banks & mgt firms, holds no relevance to service companies eg. mcds
• not all firms from given country are successful, suggesting corp. mgt is more important than geo location

Question 11

what does firm strategy, structure and rivalry refer to in porters diamond model?

Answer 11

domestic rivalry promotes innovation & competitiveness; monopolies often hinder global success

Question 12

what does the legal element of PESTEL analysis include?

Answer 12

laws and regulations that affect business eg. health & safety, employment laws, IP

Question 13

give criticisms of PESTEL analysis.

Answer 13

• over simplification
• lack of prioritisation
• static snapshot
• limited depth
• excludes internal factors
• too general for decision making
• time & resource intensive
• risk of bias or misinterpretation