PESTEL - P&L

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.       Political	@ macro level	@macro level and  micro level	Strong threat = -50 Strong opportunity = 50
identify different drivers of political environment	Quantify the effect of change to whole industry	Quantify impact to concerned company	Weight the effect of changing external  environment
Ø Taxation policy	6	-5	-30	big impact

Political factors under PEST analysis is separated into Political and Legal factors under PESTEL analysis. PESTEL factors can be classified as opportunities and threats in a SWOT (Strength, Weakness, Opportunities and Threats) analysis.

Political factors: Political factors deal with the public. Political factors are government policies and administration practices. Political environment includes - political stability/instability, changing governance policies, government rules and regulations on trade regulations. In some cases, political factor can have a positive local perspective and the same can have a negative global perspective and vice versa. For example: government policy to provide subsidies to local companies can discourage global free trade policy.  Here the essence is to identifying threats imposed by changing political environment and use organisation's strength to overcome threats. Eg; Transfer pricing  for a global firm, if applicable.

Legal factors: Law gives rights and responsibilities. Laws, rules and regulations change over time. Law gives freedom and as well it sets limits and hurdles. Legal environment within a territory may or may not match global legal environment. It influences the way business operate. Legal factors includes, taxation law, employment law, environment law, basic human right, minimum wage act, safety regulations and many more. Organisations should identify opportunities and threats within changing legal environment. Eg; may include tax avoidance if practicable.