Macro Environment Flashcards
What can PESTEL analysis be used for?
To analyse the macro environment for opportunities and threats
What does PESTEL stand for?
Political, Economic, Social, Technological, Environmental and Legal
PESTEL - Potential Political issues
Taxation policy
Government spending
Foreign trade regulations
PESTEL - Potential Economic issues
Economic growth
Exchange/interest rates
Inflation
PESTEL - Potential Social and Demographic issues
Attitudes, tastes and fashion
Population demographics
Income distribution
PESTEL - Potential Technological issues
New products
Improved production methods
Rate of obsolescence
PESTEL - Potential Ecological (environmental) issues
Sustainability
Pollution and climate change
Natural capital impact
PESTEL - Potential Legal issues
Industry regulation
Competition legislation
Employment law
What can Porter’s diamond be used for?
To explain why some nations have a competitive advantage in certain industries
What are the 4 determinants of Porter’s diamond?
Demand conditions
Strategy, structure and rivalry
Related and supporting industry
Factor conditions
Porter’s Diamond - Factor conditions
The availability of the factors of production (human resources, physical resources, knowledge etc)
E.g. French wine with good grapes
Porter’s Diamond - Demand conditions
Demanding local consumers force firms to become innovative
E.g. German drivers demand powerful cars
Porter’s Diamond - Realted and supporting industries
Leads to easy access of components and encourages knowledge sharing
E.g. Finance sector in UK aided by large accountancy firms
Porter’s Diamond - Strategy, structure and rivalry
Forces firms to become more effective to survive
