Lesson 1 Environmental Analysis
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YiyiYangLesson 1 Environmental Analysis
Uploaded by
YiyiYangLesson 1 Environmental Analysis
A. PESTLE Analysis
i. Political factors
1. These are all about how and to what degree a government intervenes in the
economy. This can include – government policy, political stability or
instability in overseas markets, foreign trade policy, tax policy, labor law,
environmental law, trade restrictions and so on.
Political stability and importance E-commerce in the country's
economy.
Risk of military invasion
Level of corruption - especially levels of regulation in Industrial
Goods sector.
Bureaucracy and interference in Manufacturing industry by
government.
Legal framework for contract enforcement
Intellectual property protection
Trade regulations & tariffs related to Industrial Goods
Pricing regulations – Are there any pricing regulatory mechanism
for Industrial Good.
Taxation - tax rates and incentive.
Wage legislation - minimum wage and overtime
Work week regulations in Heavy Construction
Mandatory employee benefits
Industrial safety regulations in the Industrial Goods sector.
Product labeling and other requirements in Manufacturing
ii. Economic factors
1. Economic factors have a significant impact on how an organization does
business and also how profitable they are. Factors include – economic
growth, interest rates, exchange rates, inflation, disposable income of
consumers and businesses and so on.
2. These factors can be further broken down into macro-economic and micro-
economic factors. Macro-economic factors deal with the management of
demand in any given economy. Governments use interest rate control,
taxation policy and government expenditure as their main mechanisms they
use for this.
3. Consideration Points:
Type of economic system in countries of operation – what type of
economic system there is and how stable it is.
Government intervention in the free market and related Industrial Goods
Exchange rates & stability of host country currency.
Efficiency of financial markets – Does Sterling Construction Company, Inc.
needs to raise capital in local market?
Infrastructure quality in Heavy Construction industry
Comparative advantages of host country and Industrial Goods sector in a
country.
Skill level of workforce in Heavy Construction industry.
Education level in the economy
Labor costs and productivity in the economy
Business cycle stage (e.g. prosperity, recession, recovery)
Economic growth rate
Discretionary income
Unemployment rate
Inflation rate
Interest rates
iii. Social factors
1. Also known as socio-cultural factors, are the areas that involve the shared
belief and attitudes of the population. These factors include – population
growth, age distribution, health consciousness, career attitudes and so on.
These factors are of particular interest as they have a direct effect on how
marketers understand customers and what drives them.
2. Consideration points:
Demographics and skill level of the population
Class structure, hierarchy and power structure in the society.
Education level as well as education standard in your industry
Culture (gender roles, social conventions etc.)
Entrepreneurial spirit and broader nature of the society. Some societies
encourage entrepreneurship while some don’t.
Attitudes (health, environmental consciousness, etc.)
Leisure interests
iv. Technological factors
1. We all know how fast the technological landscape changes and how this
impacts the way we market our products. Technological factors affect
marketing and the management thereof in three distinct ways:
a. New ways of producing goods and services
b. New ways of distributing goods and services
c. New ways of communicating with target markets
v. Legal factors
1. Legal factors include - health and safety, equal opportunities, advertising
standards, consumer rights and laws, product labelling and product safety.
It is clear that companies need to know what is and what is not legal in
order to trade successfully. If an organization trades globally this becomes a
very tricky area to get right as each country has its own set of rules and
regulations.
vi. Environmental factor
1. These factors have only really come to the forefront in the last fifteen years
or so. They have become important due to the increasing scarcity of raw
materials, pollution targets, doing business as an ethical and sustainable
company, carbon footprint targets set by governments (this is a good
example were one factor could be classes as political and environmental at
the same time). These are just some of the issues marketers are facing
within this factor. More and more consumers are demanding that the
products they buy are sourced ethically, and if possible, from a sustainable
source
After you have completed a PESTEL analysis you should be able to use this to help you identify
the strengths and weaknesses for a SWOT analysis.
