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PESTL Framework

The PESTEL framework categorizes macroenvironmental influences into six main types: 1. Political - factors like government policies, stability, and ideology that impact organizations. 2. Economic - factors like interest rates, inflation, and unemployment that impact demand. 3. Socio-cultural - demographic and cultural factors like education levels, social values, and lifestyle changes. 4. Technological - factors like innovation, technology adoption rates, and government technology spending that impact operations. 5. Environmental - factors like pollution and environmental regulations that provide opportunities and threats. 6. Legal - the legal environment organizations must operate within.

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665 views2 pages

PESTL Framework

The PESTEL framework categorizes macroenvironmental influences into six main types: 1. Political - factors like government policies, stability, and ideology that impact organizations. 2. Economic - factors like interest rates, inflation, and unemployment that impact demand. 3. Socio-cultural - demographic and cultural factors like education levels, social values, and lifestyle changes. 4. Technological - factors like innovation, technology adoption rates, and government technology spending that impact operations. 5. Environmental - factors like pollution and environmental regulations that provide opportunities and threats. 6. Legal - the legal environment organizations must operate within.

Uploaded by

Prasanna Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Macro Environment - PESTEL Framework

The most general layer of the environment is often referred to as the macro environment which
consists of broad environmental factors that impact to a greater or lesser extent on almost all the
organizations. It is important to build up an understanding of how changes in the macro environment
are likely to impact on the individual organizations. PESTEL framework is used to identify how
future trends in the political, economical, social, technological, environmental and legal environments
might impinge on organizations.

PESTEL framework categories environmental influences into six main types:


1.

Political

It is general to all the organizations within an industry. It includes such factors as


-

state of political development,


level of political morality,
the law and order situation,
political stability,
political ideology and practices of the ruling party,
the governmental intervention in the economy and the industry,
governmental fiscal, monetary, industrial policies and so on.

2. Economical
Economical environment of an organization includes the factors and forces in the industry to which
the organization belongs. It includes such factors as
-

business cycle.
GNP trends,
interest rates,
money supply,
inflation,
unemployment,
disposal income,
demand dynamics,
conditions in resource markets which influence the supply of input
costs, quality, availability and reliability of suppliers.

3. Socio cultural
It is the general to the organization which influence almost all the organizations in similar manner.
It includes the factors such as
-

population demographics,
social mobility,
lifestyle changes,

level of education,
degree and rate of urbanization,
social traditions, values and beliefs,
level of education and literacy,
ethical standards and state of society,
Attitude to work and leisure.

4. Technological
At present, the most important factor which is controlling and changing the people's life is
technology. Technology has literally created wonder. It has changed the way people communicate
and the way how the business operates with the advent of internet and communication system. It
includes the factors such as
-

innovations and developments in technology,


speed of technological changes,
rates of obsolescence,
government spending on research,
government focuses on technological effort,

Technology has spread both opportunities and threats to business organizations. It can act as
opportunity as business organization can take advantage of adopting technology innovations to their
strategic advantage. However, at the same time it can be a treat to an organization in case the
organization is not able to take the advantage of technological innovations.
5. Environmental
Environmental factors consists of such factors as environmental population, pollution etc. These
factors too great influence the strategy and its choice. These factors provide both opportunities
which a business firm can exploit and threat which the firm have to face.

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