Claire Devlin

PESTEL

Claire Devlin

Environmental Analysis

• Political

• Economic

• Socio-cultural

• Technological

• Environmental

• Legal

Claire Devlin

Political

• Government ownership of industries and attitude to monopolies and competition

• Taxation policy

• Foreign trade regulation

• Government stability

• Political parties and alignments at local national and European level

Claire Devlin

Economic Factors

• Business cycles• GNP trends• Interest rates• Unemployment• Energy factors• Currency fluctuations and exchange rates• Inflation• Consumer expenditure and disposable income

Claire Devlin

Socio-cultural factors

• Attitudes to work and leisure

• Demographic change

• Income distribution • Social mobility • Lifestyle• Consumerism • Health and education

Claire Devlin

Technological

• Government spending on research• Industry spending on research• New developments or discoveries• New services, products and ideas• Speed of technology transfer• Internet availability• Telecommunication infrastructure• Degree of competition

Claire Devlin

Environmental

• Green issues that affect the environment

• Level and type of energy consumed

• Renewable energy

• Rubbish waste and its disposal

Claire Devlin

Legal

• Competition and government policy

• Employment and safety law

• Product safety issues

Claire Devlin

Environmental Analysis

• A strategic planning system interacts with the environment, especially those factors that have actual or potential impacts on the organisation

• Environmental forces impact on business in different ways and with different degrees of strength

Claire Devlin

Basis of effective PESTEL analysis

• A PESTEL analysis should not result in a long list of factors

• It should concentrate on the key issues relating to the industry or firm

Claire Devlin

Basis of effective PESTEL analysis

Strategic issues that will impact on the firm.

• A change in the law. The tariff on plastic bags has affected the companies that makes them

• A change in technology: such as development of a hard plastic to replace metal components

Claire Devlin

Basis of effective PESTEL analysis

Trends

• Need to look at factors that will affect the firm, – Ageing populations,

– Rise in energy costs– Restrictions on waste

Claire Devlin

Basis of effective PESTEL analysis

PatternsClusters of related activities that change the

behaviour of the target market.

These are most often seen in life-style models such as the “Yuppie” phenomenon of a few years ago

Claire Devlin

Basis of effective PESTEL analysis

Projections and forecasts

– Some demographic trends are well understood. Rise of the affluent grey market resulting from early retirement and home ownership

– Trying to predict behaviour in the green environmental market more difficult since it is a life style choice and is erratic and unstable

Claire Devlin

Basis of effective PESTEL analysis

Changes• Unexplained or sudden changes in trends.

Each warrants further study to see if it is a “one off” or the start of a strategic issue.

e.g.,– Texting on mobile phones– Rise in alcopops – Atkins diet

Claire Devlin

Applications of PEST model

Apply PEST factors to recent developments in:

• public houses

• the grocery retail trade• the mobile phone industry

Claire Devlin

Application of PEST model to Public Houses

• Political: smoking ban, introduction of identity cards

• Economic: rise in disposable incomes

• Social/cultural: alcopops introduced for younger drinkers. The switch from brown to white spirits

• Technological: wide use of TV for matches

Claire Devlin

Applications of PEST model to The grocery retail trade

• P Regulations concerning under-cost selling

• E Rise in incomes which allowed Lidl to enter market unnoticed. Fall in incomes leading to stealing market share

• S Choice of sites for Lidl. Growth in petrol station forecourt shops to accommodate fast pace of life

• T Use of loyalty cards to build up customer profile

Claire Devlin

The grocery retail trade

Political

• More info on products

• Selling certain % of Irish goods

• Minimum wage

• Competition regulation

Claire Devlin

The grocery retail trade

Economic

• More money to spend

• Inflation

• Rising incomes allowed Lidl to enter market unnoticed

Claire Devlin

The grocery retail trade

Socio cultural

• More women working/convenience food

• Consumers more informed

• Bigger range of products/ more ethnic products

• Differently priced supermarkets aiming at different market segments

Claire Devlin

The grocery retail trade

Technological

• On line Tesco

• Scanning automatically

• Loyalty cards

Claire Devlin

Application of PEST model to the mobile phone industry

• P granting of licences for 3G phones too expensive (governments have a monopoly)

• E increase in disposable incomes. Texting seen as cheaper and more efficient option

• S young people create Texting themselves. Mobile phone seen as indispensable in a busy world. Tariffs on pre-paid phones

• T predictive text, colour screens, cameras, new 3 G phones