Strategic Marketing and Management Essay: PESTEL Analysis

On October 20th, 2011, Posted by author

Last modified: October 26, 2015

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PESTEL is the acronym for Political, Economic, Social, Technological, Environmental and Legal Factors of a country that can affect business situated in that country. PESTEL analysis is carried out when the management of a firm is planning expansion or formulating marketing strategies in a country.

This analysis shows the positive and negative impacts of the situation in a country on the business. PESTEL analysis is important for students and researchers when they prepare industry reports while writing a term paper.


Business managers have to study the main drivers of change that would impact their business strategies in the country in which they plan to operate their business and identify those factors that have more probability of affecting the business performance of their company.

The Political factors to be analysed would include the political stability, laws and regulations regarding taxes, tariffs, entry mode, trade, pricing, anti-trust laws, employee rights and benefits and  intellectual property rights. These political factors can also impact the business indirectly by the quality of education, the health of the workers and the infrastructure facilities including transport.

Economic factors that could affect the business and its customers  include: inflation, currency exchange rates, unemployment and literacy rates, health of the financial institutions, market strategy, credit accessibility, interest rates, currency stability, economic growth, and disposable income available to the customers. For instance, higher interest rates would discourage investment but a strong currency would impede export.

Social factors such as demographics of the population, distribution of wealth, life styles and trends, attitudes towards career, health, environment and educational levels play an important part in the business activities because the society provides the workforce and the customers for the business.

Technological factors that are of importance for the carrying out of the business activities and also for future development include: innovations and discoveries, the rate of implementing the innovations and discoveries, new technological platforms, and the rate of obsolesce of technology. New inventions and discoveries to improve and make the product cost-effective would be of benefit to the companies and the customers.

Two new factors – environmental and legal were added later to the original PEST analysis. Environmental factors have become important in view of the new consciousness about the effect of the business on the environment, like emission of green house gases, climate change, and pollution. This has mandated laws for environmental protection waste disposal, pollution limits, energy consumption, and other ecological aspects. The management of the company should know these regulations to operate in the country without any infringements.

Legal factors include laws relating to health and safety, waste disposal, consumer protection, competition, employment, discrimination and product regulations. Any infringements against these laws would incur heavy costs and legal fees to the company, so, the management must be aware of the legal aspects of the country.

PESTEL and SWOT analysis are part of industry reports. PESTEL analysis of any country that you are interested in is available from our research paper writing service. Contact our essay online services and order our essay writing service for custom papers.

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