PRESENTATION ON PESTEL ANALYSIS

BY ANAND S. AWAR (MBA 2010 01)

SCHOOL OF BUSINESS STUDIES CENTRAL UNIVERSITY OF KARNATAKA

PESTEL ANALYSIS

Learning Objectives:
v To identify environmental forces influencing business. v To examine the significance of environmental factors to business. v To be able to undertake PESTEL Analysis.

PESTEL ANALYSIS What is PESTEL Analysis?

PESTEL Analysis is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different environmental factors that the company has to take into consideration.

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The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans.

PESTEL ANALYSIS When is PESTEL Analysis used?

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Launching a new product or service; Entering a new market; Investigating a potential partnership; Considering a potential acquisition; Examining an investment opportunity.

PESTEL ANALYSIS
Break up of PESTEL Analysis

Organization

PESTEL ANALYSIS Political Factors

This is the most important influence on the functioning of any business. Political environment mainly includes the following components:

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Political System Political Ideology Political Stability Thinking of Opposition Parties Relation of Government with other Countries Defense and Military Policy International Political Environment (E.g., America-Iraq War, Mumbai Terrorist Attack etc.)

PESTEL ANALYSIS Economic Factors

Economic forces affect organizations in every part of their activities. The components of economic environment are as follows:

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Economic system (Capitalism, Socialism, Mixed Economy) Economic Conditions Foreign Trade Policy Foreign Investment Policy Monetary Policy Fiscal Policy Inflation Rate of Interest Exchange Rate International Economic Environment

PESTEL ANALYSIS Social Factors

Business is an integral part of the society and both influence each other.

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Family System Religion Culture Language Etiquette Ethics Education Occupation Development of Rural Areas

PESTEL ANALYSIS Technological Factors

Technological environment, like its counterparts political, economic and social wields considerable influence on the business.

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The rate of technological change Research & Development activity Information Technology, Internet

PESTEL ANALYSIS Environmental Factors

The environmental factors determine what can be done in a society and how institutions can function. The important environmental factors relevant to the business are as follows:

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Climatic and Weather Conditions Availability of Natural Resources Topographical Factors Location Aspects Global Warming Environmental Legislation

PESTEL ANALYSIS Legal Factors

Some of the important factors and influences operating in the legal environment are as follows:

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Legal System Economic Legislation Environmental Laws Provisions of the Constitutions Government Agencies Product Standards Disclosures Regulation of Promotion

PESTEL ANALYSIS Other Forms of PESTEL

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SLEPT: Social, Legal, Economic, Political, Technological. STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical. PESTELI: Political, Economic, Social, Technological, Environmental, Legal, Industry. PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic.