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Pestle analysis is an analysis used to understand the environment macro-factors that impact an organisation. PESTEL or PESTLE is an abbreviation for:
P - Political
E - Economic
S - Social
T - Technological
L - Legal
E - Environmental
Political: Government and political establishments affect the business a lot. Political factors incorporate policies on tax, Fiscal arrangement, trade tariff, corruption, conflicts, bureaucracy, exchange duties, trading policies, wars, and terrorism, etc. They influence the organisation and impact the organisation on how they do business. To keep yourself in the market, the organisation needs to understand these factors well in time and react to them in ways possible.
Economic: The next factor which is crucial to understand is the economic factor. These factors include economic growth, inflation rates, interest rates, exchange rates, disposable income of consumers and unemployment rates, etc. It has a long-term impact on the company.
Such factors are further divided into macroeconomic and micro-economical factors. Macroeconomic factors manage demand management in any given economy. It heavily affects B2C organisations in particular.
Social: They are also known as socio-cultural factors. They are involved in the shared belief and attitudes of the people. Factors such as population growth, age distribution, health consciousness, career attitudes, etc. are the part of macro-economics. These variables are quite compelling, as they directly affect how the marketers understand the customers and what will drive them.
Technological: Technological factors are related to innovation in the industry and innovation in the overall economy. Not coping up with the latest trends of a particular industry can be extremely harmful to the organisation. This refers to automation, research, development, and the measure of mechanical mindfulness that a market possesses. Technological factors influence marketing and management in three distinct ways:
Environmental: With the increased shortage of raw materials, ethically and sustainably doing business become the most important ones as they have to take care of the targets set by the government for carbon footprints and pollution targets. There is a challenge faced by marketers. The customer demands that the products which they are buying must be sourced ethically and from a sustainable source.
Legal: These factors have both internal and external aspects. It includes labor laws, health and safety standards, consumer laws, product quality, labeling, etc. If a company wants to trade successfully, it should know what is legal and what is illegal. A global or international organisation needs to follow the legalities of other companies as well.
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