Business Environment

Session - 9

Hnd in BM

Batch 6

Content

• What is PESTLE analysis?

• What does PESTLE analysis include?

• Case study on Apple.

Classification Environment

1. Internal EnvironmentEg. Organizational Culture & Structure, Management,

Staff

2.External Environment

Eg. PESTLE

PESTLE analysis

• PESTLE is an analytical tool which

considers external factors and helps

you to think about their impacts

PESTLE analysis

• Is a useful tool for understanding the “big picture” of the environment in which you are operating

• By understanding your environment, you can take advantage of the opportunities and minimize the threats.

• This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves.

The factors in PESTLE analysis

• P – Political– The current and potential influences from political pressures

• E - Economic– The local, national and world economic impact

• S - Sociological– The ways in which changes in society affect the project

• T - Technological– How new and emerging technology affects our project / organization

• L - Legal– How local, national and global legislation affects the project

• E - Environmental– Local, national and global environmental issues

• In contrast to a SWOT, PESTLE encourages you

to think about the wider environment and what

might be happening now and in the future which

will either benefit or be of disadvantage to the

organization, individual etc

– a kind of radar which picks up trends and

developments in the external environment which

can be used to inform longer term planning and

strategy making

PESTLE vs. SWOT

• Political:– Government type and stability

– Freedom of the 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

– Environmental and consumer-protection legislation

– Likely changes in the political environment

• Economic:– Stage of a business cycle

– Current and projected economic growth, inflation and interest rates

– Unemployment and supply of labor

– Labor costs

– Levels of disposable income and income distribution

– Impact of globalization

– Likely impact of technological or other changes on the economy

– Likely changes in the economic environment

PESTLE

PESTLE

• Sociological:– Cultural aspects, health consciousness, population growth rate, age distribution,

– Organizational culture, attitudes to work, management style, staff attitudes

– Education, occupations, earning capacity, living standards

– Ethical issues, diversity, immigration/emigration, ethnic/religious factors

– Media views, law changes affecting social factors, trends, advertisements, publicity

– Demographics: age, gender, race, family size

• Technological:– Maturity of technology, competing technological developments, research funding,

technology legislation, new discoveries

– Information technology, internet, global and local communications

– Technology access, licensing, patents, potential innovation, replacement technology/solutions, inventions, research, intellectual property issues, advances in manufacturing

– Transportation, energy uses/sources/fuels, associated/dependent technologies, rates of obsolescence, waste removal/recycling

PESTLE

• Legal:– current home market legislation, future legislation

– European/international legislation

– regulatory bodies and processes

– environmental regulations, employment law, consumer protection

– industry-specific regulations, competitive regulations

• Environmental:– Ecological

– environmental issues, environmental regulations

– customer values, market values, stakeholder/ investor values

– management style, staff attitudes, organizational culture, staff engagement

• It is possible to use the PESTLE analysis on projects as well for organizations

• It is not always needed, especially if the projects are small

• If PESTLE analysis is used for a project, then the focus should be on solving the “focal problem” and analyze how the external environment is affecting the process of solving the “focal problem”

– e.g. the guidelines from the European Commission do not include PESTLE in their logical framework approach

PESTLE analysis and projects

• The main problem with these external PESTLE factors is that they are continuously changing

• Therefore PESTLE analysis should include a thorough analysis of what is affecting the organization or a project Now, and what is likely to affect it in the Future

• The result of a PESTLE analysis is usually a list of positive and negative factors that are likely to affect a project – However, by themselves, theses factors they mean very little

– It is important to bear in mind, that PESTLE analysis requires careful Application of results

Issues of concern

• Other forms of PEST - PESTLE, PESTLIED, STEEPLE and SLEPT:Some people prefer to use different flavors of PEST analysis, using other factors for different situations. The variants are:

• PESTLE/PESTEL: Political, Economic, Sociological, Technological, Legal, Environmental;

• PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic;

• STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical; and

• SLEPT: Social, Legal, Economic, Political, Technological

Similar analysis

P E S T L E14

Presentation Agenda

• Introduction

• PEST Analysis

• PESTLE Analysis

• Dimensions of the model

• Aim of the analysis

• Apple Inc – PESTLE Analysis

• Conclusion

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Introduction

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976 to develop and sell personal computers. It was named Apple Inc. on January 9, 2007 to reflect its shifted focus towards consumer electronics.

Its best-known hardware products are the Mac line of computers, the iPod media player, the iPhone smartphone, and the iPad tablet computer.

Apple has continuously come up with innovative products making it the most valuable company in the world and leaving behind all its competitors.

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PEST Analysis

It is a simple and effective tool used in situation analysis to identify the key external (macro environment level) forces that

might affect an organization.

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PESTLE Analysis

PEST

LE

PESTLE

Incorporating the Legal and Environmental dimensions in the model makes it more comprehensive and gives better results.

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Dimensions of the model

• Government stability

• Tax policy

• Trade control

• Import restrictions

• Competition regulation

• Tariffs

• Regulation/de-regulation

• Bureaucracy

• Growth rates

• Inflation rate

• Interest rates

• Exchange rates

• Unemployment trends

• Labor costs

• Stage of business cycle

• Credit availability

• Stock market trends

• Trade patterns

• Health consciousness

• Education level

• Population growth rate

• Lifestyles

• Buying habits

• Religion and beliefs

• Age distribution

• Family size

• Minorities

• Life expectancy

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• Basic infrastructure level

• Rate of technological change

• Spending on research & development

• Legislation regarding technology

• Anti-trust law

• Discrimination law

• Copyright, patents / Intellectual property law

• Consumer protection

• Employment law

• Health & safety law

• Weather

• Climate change

• Laws regulating environment pollution

• Air and water pollution

• Recycling

• Waste management

• Carbon footprints

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Aim of the Analysis

Find out the current external factors affecting an organization.

Identify the external factors that may change in the future.

Exploit the changes (opportunities) or defend against them (threats) better

than competitors would do.

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Apple Inc – PESTLE Analysis

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P

E

S

T

L

E

Political Factors

• It is reported that more than a half of sales of their products come from countries other than America.

• Apple Inc manufactures a number of its parts and products from outside the US, like Czech Republic, Ireland, China, Korea and Cork.

• The bad political relations between US and the other world have bad outcomes for the company.

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Economic Factors

Inflation, recession and currency are three important economic factors that Apple noticed.

Since Apple Inc products were viewed as luxury products, therefore customers started pending less on them.

US dollar value keeps fluctuating, however the company has purchased itself foreign currencies and thus, the

economic effects on the company are minimized.

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Social Factors

Possessing these items are considered as status symbols in many societies which have also increased the sales of Apple Inc products.

As the purchasing power of the common has risen in various markets across the world the purchasing of luxury products have gone up.

As the world cannot be imagined without the gadgets, thus Apple products have marked their presence on the international market.

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Technological Factors

• Technology has a short lifetime. That is why Apple needs to upgrade their product more often so they will outdo their competitors easily.

• Apple Inc has invested largely in its product research and development field and thus its products are at the top of the new innovative products ranking.

• One of the most innovative and technologically advanced products is the iPod which marked the demise of walkman.

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Legal Factors

Apple Inc has been a participant in various legal proceedings and claims since it began operation.

In October 2009, Nokia Corporation sued Apple for Apple's infringement of Nokia's patents relating to wireless technology

Apple has been in a number of patent cases with players like HTC and Samsung.

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Environmental Factors

From reporting the entire carbon footprint to finding ways to reduce that footprint, Apple takes a

comprehensive approach to environmental responsibility.

Apple’s commitment to the environment includes properly disposing of electronic equipment at the end of its useful life. It responsibly recycle your computers and

displays.

On track towards achieving an ambitious goal: to power every Apple facility entirely with energy from renewable

sources — solar, wind, hydro and geothermal.

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Conclusion

PESTLE Analysis is one of the most comprehensive models to study the effect of various forces present in the environment and subsequently prepare oneself to

exploit the opportunities and defend against the threats.

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T H A N K

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Y O U