PESTLE Analysis Flashcards
What are the 6 external factors in the PESTLE acronym?
Political
Economic
Social
Technological
Legal
Environmental
What does P stand for and what does it refer to?
Stands for Political
Refers to the political influences which impacts businesses, whether it is local, national or global level.
What are the key factors that are commonly analysed under the Political heading? (3)
Level of government support the business receives.
Regulation which impacts the industry the business operates within.
Membership of trading communities (EU) benefits or restrictions this place on businesses.
What are the Key Political Factors? (3)
Tax - Gov can raise, lower corporation tax or affect businesses by increasing Valued - Added Tax on products or business rates.
Laws - New laws like National Minimum Wage
Political Stability - Events like leaving EU (Brexit) impact on UK firm’s trade with EU single market.
What are the range of factors in Economic of PESTLE? (7)
Fiscal policies
Rate of inflation
Monetary policies
Unemployment rates
Interest rates
Exchange rates
Economic growth (GDP)
What are the range of factors in Economic mean? (7)
Fiscal policies - By Gov to generate income, set budgets for upcoming financial periods
(Any changes must be acknowledged by business as they dictate levels of taxation, and levels of government spending)
Monetary policies - Affect how much prices are rising (rate of inflation)
(Monetary Policy also developed to control supply of money in economy to support the GOVs other economic aims, growth, employment)
Interest rates - Impact a variety of factors for businesses
(interest rate rise, cost of borrowing increases, customers likely to save their money = decrease amount spent on products, services)
Economic Growth (GDP) - crucial for long-term success of businesses, avoiding recessions
(Economy good = more disposable income and spend more money on products and services.)
Exchange rates - Exchange rates impact UK’s global purchasing, selling power
(Strong pound sterling against euro boost UK businesses buying power, reducing costs, allowing to pass savings onto customers, increase profit margins)
Unemployment rates - Impact disposable income levels within the country it operates in.
(Unemployed high, less employed which reduces overall level of disposable income, less money to spend on goods, services.)
Rate of inflation - Measures for consumers as it provides indication of change in prices for goods, services over time.
(Inflation rises every pound worth less as buying power decreases and wages don’t increase in line = less money to spend on product, services)
What does the S stand for in PESTLE and what does it refer to?
Stands for Social
Refers to nation’s attitude.
What are the factors for Social in PESTLE?
Savings
Consumers’ tastes and preferences
Spending and debt
Change
Social responsibility
What are the range of factors in Social mean? (5)
Saving - Social attitudes towards saving influence consumer behaviours with lower disposable income reducing savings.
(Incentives like ISAs motivate saving, while high interest rates boost economy, prioritising saving changes consumer behaviours.)
Spending and debt - Social attitudes on spending, debts significantly influence business success.
(Businesses offering premium goods, services through finance options thrive, while those focusing on minimal spending and avoiding debt thrive. (E.G LIDL, ALDI)
Social responsibility - Social attitudes towards social responsibility are changing, with consumers considering ethical impacts before purchasing.
(Business must understand public expectations and adapt to shift, as rise of vegan food ranges in businesses.)
Change - Social attitudes significantly influence business adaptation to change.
(Supermarkets adapting their product range to meet local demographic trends, such as introducing popular Polish food.)
What are the Key Social Factors that affect the habits and spending of customers? (3)
Demographics - Demographic change such as ageing population in UK is crucial for firms offering products, services for older consumers, indicating strength of “grey pound”
Lifestyles - Health-conscious consumers influence lifestyles by adding nutritional info in food packaging and embracing electronic products e.g pedometers, fitness trackers.
Tastes and trends - Trends, tastes constantly evolve as seen with loom bands, popularity in 2014 and fidget spinners in 2018 due to changing tastes, trends.
What does T stand for PESTLE and what does it refer to? (2)
Stands for Technological
Refers to the impact of technology which influences change in business.
What are the Key Technological Factors? (4)
ICT
Research and Development
Automation
E-commerce
What does L stand for in PESTLE and what does it refer to? (2)
(REFER TO DIZZY GC ESP 6WEEKS FOR IMAGE)
Stands for Legal
Refers to the Laws that are in place and which influence the way businesses operate.
(Regularly analysing the legal environment helps businesses stay updated on changes and potential consequences, like fines, publicity, imprisonment. )
(Key areas of legislation affecting businesses include employment, consumers, and competition.)
What does E stand for in PESTLE and what does it refer to? (2)
Stands for Environmental
Refers to environmental factors, ethical trends which affect businesses.
(Businesses must be aware of environmental factors, ethical trends as they influence customer purchasing decisions and are crucial for the planet, people.)
What are the key factors that fall into the Environmental heading? (4)
Carbon emissions
Waste
Recycling
Pollution
What can the key factors that the Environmental heading mean?
Carbon emissions - impact businesses’ finances and livelihoods
(With the UK’s commercial sector accounting 18% of C02 emissions in 2018, sustainability, and lowering emissions are priorities for businesses, with strats continually checked.)
Waste - impacts planet, people and profit.
(Businesses should investigate efficient production processes, or consider supplier changes to improve material quality.)
Recycling - crucial for businesses, especially in UK, where single-use plastic waste is significant issue.
(2015, 6.3B tonnes of plastic used with only 9% recycled, government, businesses are implementing changes, such as single-use plastic bag charge to improve situation, raise revenue for good causes.)
Pollution - impacts health, with 4.2M premature deaths annually linked to pollution-related health issues.
(CDP Carbon Major reports, 2017 found that 100 companies e.g. Shell, BP, Chevron contributed over 70% of global greenhouse gas emissions since 1988.)
