The PESTEL Framework Flashcards
Importance of the identification of issues by the PESTEL framework
The identification of the issues provide opportunities for the organization or pose threats to the organization.
How does the PESTEL framework help business leaders?
It helps managers to understand and make effective plans in response to the impact of society on their organization.
Political factors
The political factors include government regulation, environmental regulations, and tax policy. Other political factors are trade restrictions and political stability.
Importance of political stability
Political stability is particularly important when a business is considering whether or not to invest in a new production facility in a country.
Economic factors
These include economic growth, inflation , interest rates and currency exchange rate. These factors affect the cost of borrowing I.e cost of capital and the purchasing power of organizations and consumers.
Effects of strong economy
Unemployment is low and income of workers tend to rise
Social factors
These factors include population growth, age, demographics and attitudes. These factors influence consumer tastes and expectations and the potential market size for an organization’s goods and services.
Effect of constant development in technology and increased consumer expectations
This leads to shorter product life cycle.
Importance of big data and advanced data analytics
They enable businesses to leverage data to generate insight and to make better informed decisions.
Effect of social networks
They have increased the power of consumers and made it easier to hold businesses accountable.
Importance of cloud computing
It provides businesses with the ability to access and store data without owning their own servers.
Importance of mobile technology
It allows businesses to communicate with customers, partners, suppliers and employees anytime, anywhere.
Use of RPA
Robotic Process Automation enables businesses to automate routine tasks, freeing up workers to focus on more knowledge based tasks
How can technology be used to create a barrier to entry to a market?
By developing products and solutions based on new or proprietary technology which is hard for competition to replicate.
Environment
It relates to the impact the business has on the natural environment. It covers CSR and ethical, sustainable sourcing of goods and services. Such sourcing affects the procurement and supply chain management.
