PESTEL - S&T

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. Social	@ macro level	@ macro level and micro level	Strong threat = -50 Strong opportunity = 50
identify different drivers of social environment	Quantify the effect of change to whole industry	Quantify impact to concerned company	Weight the effect of changing external  environment
Ø High child birth rate	5	3	15	Positive effect

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

Social factors: These impact on the consumer's need (by cultural influences) and the potential market size (by demography) for an organisation's goods and services. Socio-cultural factors include population growth, age demographics, attitudes towards health, cultural believes and practices, religion and language. Present globalised business world has minimised propensity of cultural barriers. Government policy related to population structure, housing, employment and health can impact on demographic composition of a particular region or of whole country. Eg: Increased child birth rate in a geography results increase demand of children needs.

Technological factors: These influence barriers to entry, make or buy decisions and investment in innovation, such as automation, investment incentives and the rate of technological change. It includes changes in production method, communication style, sales methods and strategy, redefining marketing strategies and so on. Organisation need to know changes in technology to stay ahead of any changes to gain competitive advantage. Example Kodak, manufacturer of high quality photographic films and papers fail to predict accurately the falling demand of its product. The shift of its production to digital camera did not succeed and it was unable to keep up with changing market.