what is PESTLE analysis?
(PESTLE) Analysis - Political, Economic, Socio-cultural, Technological, Legal and Environmental
Political, Economic, Socio-cultural, Technological, Legal and Environmental Analysis were termed as PESTLE Analysis. Some models also widen this to include Ethics and Demographics, thus altering the acronym to STEEPLED. This analysis is done more from the perception of a business which is looking to setup unit offshore and analyzing several countries to opt from. This model chiefly analyses the external environmental feature that will act as influencers for a business.
To do business in any country, a business must know each of the above features very well and how changes in any/either of these would impact business. Let us see each one of these individually in brief here.
Political Factors: Countries can have a range of political structures. Communist countrieswould have social aims above anything else though capitalist ones would not essentially have all errands of a welfare state.
In addition, capitalists also display differences amongst themselves in terms of their approach to the social welfare schemes. Stability in legislation and policy, minimal corruption, bureaucracy, communal tensions and violence joined with maximum freedom of press, ease of doing business and quick turnaround time are some of the factors which investors would look at in a country. Good public finances and a reliable fiscal policy extrainvestment in infrastructure is some other significant parameters for investors.
Economic Factors: The economic stricture of a country such as GDP growth and itscontributors, inflation and interest rates, composition of imports and exports, balance of payment and exchange rate constancy, stable monetary and fiscal situation, well developed financial markets, taxation and others will define its charisma as an investment destination.
If a country depends upon exports or internal consumption, whether this internal consumption is driven by imports or domestic manufacturing, whether the country has high inflation and therefore a falling currency etc. are some of the first query which an investor will think before investing in any country.
Country’s reliance on other countries in terms of significant natural resources such as oil, monitory policies of the Central Banker, Balance of payment positions and forex reserves etc. are very significant for an investor to get a console level about a country’s economic situation. India has seen the worst and the best phases of economies in the last three decades.
Socio-Cultural Factors: The social and cultural features of the population of the country, such asthe demographic profile in terms of age, education and skills, health, social values, lifestyle aspects, all affect the fondness that people make in what they buy and consume.
Cultures influence businesses in numerous ways. With young population in India, India offers varied opportunities and confrontations in contrast to say Japan with aging population. With the change in culture, there is a change in the economic activity as well. For instance, given nuclear families and working spouses in metro cities in India, there has been araise in demand for day cares facilities, packaged foods and hotel chains/restaurants.
Technological Factors: No measurement of life can ever be fictional today without technologicalsupport. Technology is playing crucial role in taking businesses and society to the next level.
Development of a scientific rage amongst students leads to an ever technologically growing society. Countries pushing R&D activities are bound to be at the front position of technology.