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External environment analysis using PESTLE tool

PESTEL stands for Political, Economic, Sociological, Technological, Environmental, and Legal. There is an assumption that if the organization is able to audit its current environment and assess potential changes, it will be better placed than its competitors to respond to changes.

A PESTEL analysis is a useful tool for understanding the big picture of the environment in which an organization is operating.

By using PESTEL analysis, we can analyze the many different factors in a firm's macro environment. Typical PESTEL factors to consider include:

|Factor |Could include: |
|Political |e.g. EU enlargement, the euro, international trade, taxation policy |
|Economic |e.g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market |
|Social |e.g. ageing population, attitudes to work, income distribution |
|Technological |e.g. innovation, new product development, rate of technological obsolescence |
|Environmental |e.g. global warming, environmental issues |
|Legal |e.g. competition law, health and safety, employment law |

It is also important when using PESTEL analysis to consider the level at which it is applied. When analysing companies such as Sony, Chrysler, Coca Cola, BP and Disney it is important to remember that they have many different parts to their overall business - they include many different divisions and in some cases many different brands. Whilst it…...

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