PESTEL ANALYSIS

POLITICAL: Political factor includes Government Policy, Political Stability and Instability,

Corruption, Foreign Trade Policies, Tax Policies and etc. At this at stage the government may

have a profound impact on how a nations education system works, how infrastructure looks

like and the health sector is regulated. These are all factors that needs to be taken into account

when accessing the attractiveness of the potential market.

ECONOMIC: Economic factors are determinates of certain economic performance. They

include Economic growth, Exchange rates, Inflation rates, interest rates, Disposable income

of consumers, unemployment rates. This factors may have a direct or indirect long term

impact on a company since it affects the purchasing power of consumer and could possible

change the demand and supply of the economy. It also affects how companies price their

products and services. For example if the purchasing power of a country is relatively low,

prices are also lower.

SOCIAL: Social factor represents the demographic characteristics, norms, customs and

values of place within which the organisation operates. This includes population growth rate,

age distribution, income levels and also attitudes towards careers, health, lifestyle and

cultural barriers. The social factors are important for marketers when targeting certain

customers. In addition, it also says something about the local workforce and its willingness to

work in certain conditions.

TECHNOLOGICAL: Technological factors promotes innovation in technology and the

regulations surrounding technology that may affect your operations you have in the industry

or market favourably or unfavourably. It talks about technology incentives, level of

innovation, automation, R&D activity, technological changes and technological awareness

the market possesses. This factors may influence marketers to:

Enter or not enter certain industries.

Lunch or not lunch certain products

Outsource prediction activities abroad by knowing what is going on technology wise. This

help marketer to be able to prevent their companies or organisations from spending a lot of

money in developing a technology which will be obsolete (archaic) very soon due to

disrupted technological changes elsewhere.

ENVIRONMENTAL: Environment factors include weather, climate, environmental offsets,

and climate change. Basically, the well-being of our planet. Growth awareness of the

potential impact of climate change is affecting how companies operates and what kind of

products they offer. This has led to many companies getting more and more involved in

practices such as cooperate social responsibility and sustainability.

LEGAL: Legal factors include more specific laws such as:

 Discrimination Laws

 Antitrust Laws

 Employment Laws

 Consumer Protection Laws

 Copyright/Patent Laws

 Health/Safety Laws.

It clears that companies need to know what is and what is not legal in order to operate

successfully and rightfully. In addition, it helps organisation to be aware of potential changes

in legislation and the impact it may have on your business in the future.