The most important model to analyse the external factor is PESTEL model. Because it analyse each external factor in detail and carefully.
It will be more helpful when you are starting a new business or business at a new place.
This chapter is all about analysing the internal environment and also external environment. Both the analysis is important for various reasons like for strategic choices and its selection, to gain competitive advantage and also to avoid strategic drift.
There are various models through which we can analyse the environment but first of all let’s start with an external analysis.
And the most important factor here in External Environment is PESTLE because here PESTLE carefully analyse the each external factors. It will be more helpful when you are starting a new business or business at a new place.
PESTEL Model:
PESTEL Model looks at the macro environment, using the following factors:
1) Political factors
2) Economical factors
3) Social factors
4) Technological factors
5) Environmental factors
6) Legal factors
Political:
Government, Government Policies, Tax system, foreign trade regulations
Economical:
Interest Rates, Demand & supply, unemployment, population income
Social:
Society’s values, attitudes, level of education, population demographics
Technological:
Changes in technology that affects the ways of working or the types of products or services demanded
Environment:
Environmental regulation, consumer’s attitude to products.
Legal:
Health & safety rules, employee related law, monopoly legislation, environmental law
The importance of the factors varies to a given company based on its industry and the goods it produces.
Example:– Consumer companies tend to be more affected by social factors.
– While defense company would be affected by political factors.
– The company who have borrowed high amount needs to focus on Economic factors.
This lesson is waiting for its secure Vimeo video.
