A PESTLE analysis is a tool used to gain a macro picture of an industry's external environment. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors. It allows a company to form an impression of the factors that might impact a new business or industry. Some factors will be more important to different types of businesses.
A PESTLE analysis allows a strategic and systematic evaluation of a business's prospects, risks and opportunities in a new environment.
While a SWOT analysis concentrates on a company's internal processes, a PESTLE analysis will help identity risk factors for the SWOT analysis.
Political factors include government policies, leadership, and change; foreign trade policies; internal political issues and trends; tax policy; regulation and de-regulation trends.
Economic factors include current and projected economic growth; inflation and interest rates; job growth and unemployment; labor costs; impact of globalization; disposable income of consumers and businesses; likely changes in the economic environment.
Social factors include demographics (age, gender, race, family size); consumer attitudes, opinions, and buying patterns; population growth rate and employment patterns; socio-cultural changes; ethnic and religious trends; living standards.
Technological factors affect marketing in (1) new ways of producing goods and services; (2) new ways of distributing goods and services; (3) new ways of communicating with target markets.
Environmental factors are important due to the increasing scarcity of raw materials; pollution targets; doing business as an ethical and sustainable company; carbon footprint targets.
Legal factors include health and safety; equal opportunities; advertising standards; consumer rights and laws; product labeling and product safety
Social factors, such as demographics and culture can impact the industry environment by influencing peak buying periods, purchasing habits, and lifestyle choices. Society is important as people’s culture and lifestyle can influence when, where and how they are likely to engage with products and services. Social factors can include:
· Religion and ethics · Consumer buying patterns · Demographics · Health · Opinions and attitudes · Media · Brand preferences · Education
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