PESTEL analysis - define, explain, give examples, evaluate - PPT

Pestle analysis

1. By the end of this session you will be able to; Explain the external factors affecting a business. P.E.S.T.L.E. Evaluate the usefulness of PESTLE as a tool for conducting external environmental analysis Today’s Objectives

2. Business does not operate in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences . These will affect the main internal functions of the business, the objectives of the business and The firm’s strategies External Factors.

3. How are businesses affected by other EXTERNAL Factors?

4. How are businesses affected by EXTERNAL Factors? Political – how changes in government policy might affect the business e.g. a decision to subsidise building new houses in an area could be good for a local brick works. Can you think of some government polices that could impact your selected business?

5. 5 minutes on political risk How are businesses affected by EXTERNAL Factors? Political

6. How are businesses affected by EXTERNAL Factors? Economic – how the economy affects a business in terms of taxation, government spending, general demand,inflation , interest rates, exchange rates and European and global economic factors . Can you think of some specific economic considerations that could impact your selected business?

7. How are businesses affected by EXTERNAL Factors? Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population. Can you think of some specific socio-cultural considerations that could impact your selected business?

8. How are businesses affected by EXTERNAL Factors? Technological – how the rapid pace of change in production processes and product innovation affect a business.

9. How are businesses affected by EXTERNAL Factors? Legal – the way in which legislation in society affects the business. E.g. changes in employment laws on wages.

10. Environmenta l / Ecological / Ethical US court signs off on BP’s $ 20bn oil spill settlement How are businesses affected by EXTERNAL Factors? Thames Water is fined a record £ 20MILLION after 1.4billion litres of polluted sewage Fish and birds died over two-year period due to 'out of control' sewage  The largest fine in the firm's history was delivered at Aylesbury Crown Court

11. The more factors you consider for analysis, the better the results you can achieve from your strategy . How will it affect your strategy?

12. By the end of this session you will be able to; Explain the external factors affecting a business. P.E.S.T.L.E. Evaluate the usefulness of PESTLE as a tool for conducting external environmental analysis This week’s objectives

13. PESTLE – a recap

14. Positive Negative PESTEL: evaluating the usefulness… Overall… *Any other factors to consider?

15. Complete the work sheet

16. PESTLE ANALYSIS STARBUCKS

17. The PESTLE analysis shows that Starbucks has a quite stable external environment . The key reason behind this might be because it operates in the Food and Beverages industry. This means consumers might reduce consumption partially but will not stop buying completely. So, as recession is the most important factor, Starbucks has to lower costs and increase the value. This way it can retain its consumer base and also gain consumer loyalty Environmental issues may be another area they have to address

18. What should Starbucks strategy be? Set Priorities Short Term vs Long Term

19. Recap PESTLE

20. Key points covered in this session: Political , e.g. government support, membership of trading communities such as the European Union Economic , fiscal, monetary and other government policies e.g. supply side policy, economic growth, exchange rates Social attitudes to saving, spending and debt; social responsibility requirements; change e.g. to demographic trends, consumers’ tastes/preferences Technological change, e.g. Automation; improved communications Environmental factors and ethical trends, e.g. carbon emissions, waste, recycling, pollution Legal environment, e.g. Partnership Act 1890, Companies Act 2006, Charities Act 2011, Competition Act 1998, UK Corporate Governance Code, financial services regulation, industry regulators PESTEL – key points

21. Are you able to; Explain the external factors affecting a business. P.E.S.T.L.E. Evaluate the usefulness of PESTLE as a tool for conducting external environmental analysis Have we met our objectives?