Adding to that, it would affect the purchasing power of a consumer and change demand/supply models for that economy. For example, a rise in the inflation rate of any economy would affect the way companies price their products and services. These factors are determinants of an economy’s performance that directly impacts a company and have resonating long term effects. that a government may levy around the fiscal year and it may affect the business environment (economic environment) to a great extent. Political factors include tax policies, Fiscal policy, trade tariffs, etc. For example, a government may impose a new tax or duty due to which entire revenue generating structures of organizations might change. These factors determine the extent to which a government may influence the economy or a certain industry. It is very critical for one to understand the complete depth of each of the letters of the PESTLE. If you don’t know what is a SWOT analysis, we have you covered.
It may be so, that the importance of each of the factors may be different to different kinds of industries, but it is imperative to any strategy a company wants to develop that they conduct the PESTLE analysis as it forms a much more comprehensive version of the SWOT analysis. More than just understanding the market, this framework represents one of the vertebras of the backbone of strategic management that not only defines what a company should do but also accounts for an organization’s goals and the strategies stringed to them.
How much importance does culture have in the market and what are its determinants?.What are the prevalent economic factors?.What is the political situation of the country and how can it affect the industry?.There are certain questions that one needs to ask while conducting this analysis, which gives them an idea of what things to keep in mind. Environmental factors in PESTLE Analysis.Technological factors in PESTLE Analysis.
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