Political, Economic, Social, Technological, Legal and Environmental Influence Analysis for Expanding Business

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Explain why an understanding of the environmental/external (PESTLE) factors is Important for all organizations

To run a successful business, it is very important to run a background check on the external environment of that particular industry. PESTLE analysis is widely used to investigate the Political, Economic, Social, Technological, Legal and Environmental influences under expanding businesses. It helps in decision-makings and also to become more aware of competitors move.

Political

Political factors affect companies in all type of industries and can have significant impact if change in government or policies occur. Changes in public spending or closing and opening of major businesses rely immensely on UK’s international relations with other countries. Eg: accession of new members like Poland can bring up new business opportunity and can have similar effects on the EU regulations. Legal changes are closely related to Political changes as Laws are frequently changed in a wide range of areas, Eg:

• Government type and stability

• Freedom of press, rule of law and levels of bureaucracy and corruption

• Regulation and de-regulation trends

• Social and employment legislation

• Tax policy, and trade and tariff controls

Economic

Economic changes are directly related to social changes. Business outcomes are associated with fluctuating economy with a series of general boom and downfalls. All businesses benefit during an economic boom and lose out during downfalls. Other changes in the economy such as changes in the interest rate, wage rates, and the rate of inflation (i.e. general increase in prices) directly affect outcomes of various industries. Businesses are always willing to take risks in order to expa...

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...eory/external-environment/pest-analysis.html#axzz2xmGA7LDr (accessed April 2014)

PEST analysis, 2013 [online] available at https://depts.washington.edu/oei/resources/toolsTemplates/PEST_analysis.pdf (accessed April 2014)

The Guardian, 2013 [online] ‘Hotel and restaurant boom helps economic recovery’ available at http://www.theguardian.com/business/2013/may/28/hotel-restaurant-boom-economic-recovery-cbi (accessed April 2014)

PEST [online] available at http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 (accessed April 2014)

Jais business blog [online] 2013, http://jaisbusinessblog.weebly.com/pest-analysis.html (accessed on April 2014)

Business week daily, [online] 2013, PEST analysis [online] available at http://www.businessnewsdaily.com/5512-pest-analysis-definition-examples-templates.html (accessed April 2014)

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