PESTEL - E&E

ACCA - F1   ACCOUNTANT  IN  BUSINESS

PESTEL - THE MACRO-ECONOMIC FACTORS

P = Political, E= Economic, S=Social, T=Technological, E=Environmental and L= Legal

Driver	Influence on industry	Impact on company	Threat to strong opportunity	Notes
	0 to 10	-5 to +5	-50 to +50
	(A)	(B)	(A) x (B)
Source: Sondhi (1999)
I created this example presented below. It reflects my personal view and understanding. There is no intention to deceive anybody using this approach for no particular industry/company is identified in the example.
1. Economic	@ macro level	@ macro level and micro level	Strong threat = -50 Strong opportunity = 50
identify different drivers of economic environment	Quantify the effect of change to whole industry	Quantify impact to concerned company	Weight the effect of changing external  environment
Ø less than normal  economic growth	2	-1	-2	little/no effect

PESTEL factors can be classified as opportunities and threats in a SWOT (Strength, Weakness, Opportunities and Threats) analysis.

Economic factors: These affect the cost of capital and purchasing power of an organisation. Economic factors include economic growth, aggregate demand/demand side ( Keynesian view), capital and interest rates/supply side (Monetarist view), unit price of energy, (Fiscal and Monetary policies) inflation and currency exchange rates. The organisation needs to know what the economic prospect and inflation rates are for the countries that it operates in and how will they affect strategy. No two community of one country or no two countries have identical economic factors. In the big picture, organisation needs to define the economy operating styles (capitalist, socialist or mixed). Eg: Vat (Zero, reduced and standard) imposed on different goods and services.

Environmental factors: Elsewhere, referred as Ecological factors. These refer to not only biological elements surrounding our habitat but also to all those physical and abstract/metaphoric (not yet identified elements that exist in Mother Nature. Identifying environmental factors and cleaning footprint for sustainable development helps reduce stringent laws and pressure from Green Groups. Some environmental factors are carbon emission, deforestation, energy consumption, garbage, sewage, and use of destructive weapons. Organisations should always act to reduce adverse effect on environment. Eg: Defined emission of carbon level from vehicles.

Note:  Triple Bottom-line Reporting (TBL) = (SEE) Social (People), Economic (Finance) and Environment (Eco-system)