Administrative Process

& Strategic Planning

PESTEL
Professor: IE Johnnathan Fernando Gutiérrez Cruz

Group 2, 3, 4

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PESTEL analysis
PESTLE analysis is a fundamental tool for business strategy and
planning. It is a method of assessing your business environment and its
possible impact on the performance of your company.

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PESTEL is an acronym that stands for six external factors affecting your
business: Political, Economic, Sociological, Technological,
Environmental and Legal. Each of these can have a profound effect on
your business and varying implications, for example, in terms of:

• duration of impact - short term or long term

• type of change - positive, negative or unknown
• rate of impact - increasing, decreasing, unchanged or unknown
• importance - critical, important, unimportant or unknown

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What are the critical components of a
PESTEL analysis?
• Political: how much is the government involved in the economy or in
that particular market? And how much a government policy can
influence that?
• Economic: how many economic factors, such as interest rates,
employment, foreign exchanged, unemployment and other factors
will affect the company’s profitability?
• Social: how much emerging trends or demographics, such as
population growth, age distribution, and so on affect the
organization?

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What are the critical components of a
PESTEL analysis?
• Technological: how much technological innovation, development,
and disruption might affect a market or the industry in which the
organization operates?
• Environmental: how much the surrounding environment and the
impact of a business on ecological aspects are influencing the
organization’s policies as well?
• Legal: how will change in legislation affect the organization’s
profitability, sustainability, and growth?

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PESTLE analysis
• The following PESTLE analysis example clarifies how the six external
factors work and what type of information you should include in your
analysis. With that said, let us take a look at some PESTEL analysis
examples of two well-known companies.

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Uber Pestel Analysis Example
• Political
• Uber seems to attract political discourse as soon as it enters a new
market. Discussion tends to be centered around culpability in the
event of an accident and whether or not Uber drivers need to obtain
taxi licenses or comply with minimum wage standards. The company
spent around $2.63 million in 2020 lobbying governments around the
world for favorable outcomes in the aforementioned areas.

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• Economic
• As transportation starts to return to normal levels in 2022, the price
of fuel has risen accordingly. This may force Uber to raise its fares and
cause consumers to look elsewhere for a ride. Nevertheless, Uber’s
place in the sharing economy – which many believe it pioneered – has
the company well placed to grow over the long term.

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• Social
• Uber is active on social media and has broad appeal to consumers
across various demographics. With 20% of Americans expected to be
65 years or older by 2030, the company also has the potential to take
advantage of less tech-savvy generations that are perhaps not in its
target audience. In the short term, the shift toward remote work may
impact Uber’s bottom line to some extent.

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• Technological
• The introduction of alternative forms of transport such as bikes and
scooters has allowed Uber to capitalize on shorter distance trips. The
features of the Uber app itself are also well documented, allowing
consumers to estimate ride costs and track their drivers in real-time.
Technology and high-speed cell networks are vital to the efficient
functioning of the company, which makes Uber vulnerable to app
issues and network outages.

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• Environmental
• The most obvious environmental factor for Uber is the air pollution
vehicles emit and consumer preferences toward greener energy
sources. As part of its “Green Future” program, the company will help
hundreds of thousands of drivers transition to electric vehicles by
2025. Uber has also made a bold commitment to offering 100% zero-
emission rides by 2040 – whether that be traditional rides, micro-
mobility, or public transport.

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• Legal
• Uber must work within the bounds of various state and federal laws
which has been made more difficult by confusion over the company’s
core business model. It has been subject to minimum wage lawsuits
and fines resulting from privacy breaches. In countries such as France,
Uber was fined heavily for operating without the required permits. It
was also banned from Germany in 2019 for a similar reason.

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Amazon PESTEL Analysis
Let’s now perform a PESTEL Analysis on Amazon, addressing each factor
in more detail.

• Political
• As a global retailer, Amazon is not immune to political factors.
Politically stable western countries with similar laws to the USA offer
Amazon expansion opportunities. However, the company has faced
stiff competition in China where the government tends to back
Chinese e-commerce companies.

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• Economic
• In the wake of the coronavirus pandemic, Amazon has benefitted
tremendously from economic stimulus measures that have increased
consumer discretionary income. However, this income has also
allowed competitors to enter the market.

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• Social
• With the shift toward convenient, fast, and contactless delivery,
Amazon has again taken advantage. Savvy and computer literate
millennial consumers are also driving huge growth in mobile shopping
as the availability of 5G networks increases.

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• Technological
• Amazon is highly innovative
within the retail sector. The
company has invested heavily
in drones to deliver parcels. It
has also created an
unattended locker system
called Amazon Hub so that
consumers can receive
parcels when it is convenient
for them to do so.

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• Environmental
• As Amazon’s distribution network grows, the company must
sustainably address its greenhouse gas emissions. In the United
States, Amazon Prime is particularly polluting because of the promise
of 1 or 2-day delivery.

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• Legal
• Amazon has had to deal with legal challenges regarding its tendency
to subvert tax law and move profits into tax havens such as
Luxembourg. The company was also recently investigated by the US
Federal Trade Commission for misleading discount claims on over
1000 of its products.

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Advantages of PESTEL analysis
By helping you to understand how external factors affect your businesses,
PESTEL can help you:

• determine their long-term effect on the performance and activities of your

business
• review any strategies you have in place
• work out a new direction, product or plan for your business
• identify solutions to problems
• gain strategic advantage on competitors
• evaluate the risks associated with markets you're interested in
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Homework #2 😎
• Make your PESTEL matrix for your company, business or enterprise
• Time: 1 week

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Now let’s go out and create
opportunities!

iijfgc@gmail.com

IIJFGC

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