What is a PESTEl analysis?PESTEL is an acronym for Political, economic, social, technological, ecological and legal. The world market has entered teh era of globalization. A large number of firms are doing business internationally. It means that they are affected by global factors. The pestel factors influence mainly the big businesses. However, the small businesses may also be influenced by them. An economic or social or legal change can affect any business. These pestel factors are important and should be kept in mind while formulating strategies for specific markets. Suppose Coca cola is trying to expand into a new market, say Hongkong or Korea. Before formulating a strategy and launching the company’s products there, the managers can conduct a pest analysis of Coca cola to know how favorable the Hong Kong market is politically, economically, legally or socially for the lauch of a new product or brand there.
Political factors: The political factors can include government regulations including taxes as well as particular regulations related to the specific sector under question. For example Coca cola belongs to the food and beverages sector. The company would need to find if the regulations applicable to it are favorable. There are other political factors like the stability of the government and the political environment that can impact the brand’s sales and revenue in any specific market. www.cheshnotes.com/2016/10/airlines-industry-pestel/Economic factors: Economic factor are also of huge importance for brands operating in global environment. Now, let’s say an airlines brand is trying to expand to China. It should first conduct a pestel analysis to know if the market has most or all factors favorable. If the Chinese economy is doing well, it can expect to do well in the market. If the economy is facing a decline, entering the market will not be a profitable decision. Social: Social trends are of huge value for brands that are affected by changing social trends. For example Mc Donalds is considering expanding to Middle East and requires to know if it would sell there. It must first consider analyzing the environment in the market by doing a PESTEL analysis of the fast food market before making an entry. If the local culture and people’s preferences do not favor fast food, entering the market will be an unprofitable decision. This also applies to the fashion brands. Technological: These factors have grown in importance in the 21st century. All brands whether big or small depend on technology and particularly information technology. It is important for both marketing and sales. The technological factorps play a huge role in the growth of the businesses in the 21st century. Ecological or environmental: Sustainability has become an important concern and a major trend in the 21st century. Many governments are especially favoring sustainable brands and products. Brands should know how green they are and how it affects their popularity and awareness. Legal: Law is an important concern for any business and they need to focus especially on compliance. However, laws may differ based on the market a brand operates in. Still, legal issues have a major impact on brand’s profitability and require consideration before investment. If the laws are stiff in any partiocular market, businesses must conduct full research before deciding to launch their brand there.
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AuthorAbhijeet Pratap Archives
October 2021
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