week 6

Week 6 (3/28/2013)

External Analysis:

The External Analysis examines opportunities and threats that exist in the environment. It also deals with monitoring and interpreting sweep of social, political, economic, ecological and technological events to spot budding trends that could eventually impact the industry.( www.emeraldinsight.com)

External Force Examples that affect the company:

1. Political, governmental & legal forces

Ø  Government stability & relations with other countries

Ø  Government spending and taxation policies

Ø  Government industrial policies (extent and nature of

Ø  regulation/deregulation)

Ø  State and local government policies and regulations

Ø  Laws and regulations:

Ø  Antitrust & mergers

Ø  Employment (equal opportunity and workplace safety)

Ø  Environment protection

Ø  Foreign trade, duties and tariffs

Ø  Patents, trademarks and copyright

2. Economic forces - Inflation & unemployment rates

 3. Social, cultural and

4. Technological forces - New discoveries/developments in own or related industry

5. Competitive forces* - Rivalry among existing competitors:

Purpose of PESTLE Analysis

Ø  GNP and GNP growth rates

Ø  Disposable income & consumer spending

Ø  Business cycles

Ø  Capital and commodity markets:

o   Availability of capital

o   Interest and currency exchange rates

o   Energy and basic raw materials prices

Ø  Import/export conditions

Ø  demographic forces

·          Population demographics:

·         Age, sex & race distributions

·         Marriage & divorce rates

·         Immigration

·          Distribution of income and wealth

·          Education systems, education levels and attitudes toward education

·          Social class structure and mobility

·          Lifestyle trends: attitudes toward:

·         Leisure time and retirement

·         Sex roles

·         Religion and social responsibility

·          Work place: attitudes toward:

·         Authority and control

·         Cooperation and teamwork

·         Unionization

·          Consumerism: attitudes toward:

·         Product quality and customer service

·         Consumption, saving and investing

·          Environmentalism: attitudes toward:

·         Pollution, ozone depletion & endangered species

·         Conservation, recycling and waste management

·          Speed of technological transfer

·          Obsolescence rates within own or related industry

·          Government policies and spending on research

·          Information & communication technology changes

·         Industry size, growth & overcapacity

·         Product differences & brand identity

·         Switching costs & barriers to exit

·         Market concentration

PESTLE analysis stands for political, economic, social, technology, legal and environmental. PESTEL is a part of the external analysis when conducting a strategic analysis and gives an overview of the different macro environmental factors that the company has to take into consideration. The purpose of PESTLE is to analysis political, economic, social, technology, legal and environmental of the firm so that the manager can achieve its goals and objectives efficiently and effectively.( www.pestleanalysis.com)

References

JohnsonG,ScholesKandWhittingtonR(2009),FundamentalsofStrategy,PrenticeHall.

(n.d.). Retrieved from www.boundless.com: https://www.boundless.com/management/strategic-management/strategic-management/external-versus-internal-analysis/

(n.d.). Retrieved from www.emeraldinsight.com: http://www.emeraldinsight.com/journals.htm?articleid=1585399

(n.d.). Retrieved from www.pestleanalysis.com: http://pestleanalysis.com/