PESTLE Flashcards
(20 cards)
What is PESTLE Analysis?
PESTLE analysis is a strategic tool used by businesses to analyze the external environment and understand the factors that could impact their operations and decision-making.
What does PESTLE stand for?
Political, Economic, Social, Technological, Legal, Environmental
What are some Political factors in PESTLE Analysis?
- Government policies (e.g., taxation, trade tariffs)
- Political stability or instability
- Government involvement in business and regulation
- Impact of trade unions and lobbying groups
What are some Economic factors in PESTLE Analysis?
- Economic growth rates
- Inflation and interest rates
- Exchange rates and currency fluctuations
- Employment rates and labor costs
What are some Social factors in PESTLE Analysis?
- Demographic changes (e.g., aging population)
- Changing consumer behaviors and lifestyles
- Cultural attitudes and social trends
- Education levels and health consciousness
What are some Technological factors in PESTLE Analysis?
- Rate of technological change
- Innovation and new product development
- Automation and artificial intelligence (AI)
- Impact of e-commerce and digital platforms
What are some Legal factors in PESTLE Analysis?
- Employment law (e.g., minimum wage, working hours)
- Health and safety regulations
- Consumer protection laws
- Environmental regulations
What are some Environmental factors in PESTLE Analysis?
- Sustainability and environmental protection
- Climate change and weather patterns
- Ethical sourcing and supply chain issues
- Waste disposal and pollution control
What is the purpose of PESTLE Analysis?
- Helps businesses understand the wider macro-environment
- Identifies external opportunities and threats
- Aids in strategic decision-making and long-term planning
- Supports risk management and market entry strategies
True or False: PESTLE Analysis only focuses on economic factors.
False
Fill in the blank: PESTLE analysis helps businesses identify external _______.
opportunities and threats
How does political stability affect business investment?
Businesses may avoid investing in politically unstable regions due to the risk of conflict or government change.
What impact does inflation have on businesses?
High inflation increases production costs, which may lead to higher product prices.
What is a significant social change affecting consumer demand?
An aging population increases demand for healthcare and retirement services.
How can technological advancements create threats for businesses?
Businesses that fail to invest in innovation risk losing market share.
What are some examples of legal factors affecting business?
- Employment law
- Health and safety regulations
- Consumer protection laws
How does climate change impact businesses?
Increased flooding and extreme weather events can disrupt supply chains and production.
What does corporate social responsibility (CSR) involve?
Engaging in practices like planting trees and reducing emissions to improve brand image and customer loyalty.
Why is understanding external trends important for competitive advantage?
Understanding external trends can give a business a competitive edge, such as early adoption of AI.
What is one example of how government policies can affect businesses?
Changes in taxation can affect business profits.
