PESTEL Analysis of the Macro-Environment

Extracted 22NOV2011 from

There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model.

Factor Could include:
Political e.g. EU enlargement, the euro, international trade, taxation policy
Economic e.g. interest rates, exchange rates, inflation, unemployment, Stock Market
Social e.g. ageing population, attitudes to work, income distribution
Technological e.g. innovation, new product development, rate of technological obsolescence
Environmental e.g. global warming, environmental issues

e.g. competition law, health and safety, employment law is important not to just list PESTEL factors because this does not in itself tell managers very much. What managers need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them..

It is also important when using PESTEL analysis to consider the level at which it is applied... Whilst we hope this book [Foundations of Economics] provides a good insight into the economy and the possible effects of economic change on a business these must be considered in the light of other macro and micro factors that influence a firms' decisions and success.

See also, the precis for the chapter on "Analysing the micro-environment" [next post]...