Economics

• PESTLE factors


  • Political
  • Economic
  • Social
  • Technological
  • Legal
  • Environmental
• PESTLE has several versions
• PEST - P stands for both POLITICAL and LEGAL factors
• STEP - S covers both social indicators and environmental forces
• The PESTLE approach and its variations are widely used in macroenvironmental analysis to identify business opportunities
• Political factors


  • Tax reforms
  • Government spending
  • Political stability
  • New government regulations
• Economic factors


  • Gross domestic product
  • Inflation
  • Interest rate
  • Foreign exchange
• Social factors


  • Demography
  • Lifestyle and trends
  • Religion
• Technological factors


  • Innovations
  • Research and development
  • Technology-related legislation
• Legal factors


  • New regulations
  • Employment trends
• Environmental factors


  • Resource constraints
  • Environmental regulations
  • Climate change
  • Greenhouse effect
  • Renewable energy
• Tax reforms


  Changes to the tax system
• Government spending


  The amount of money the government spends
• Political stability


  The level of political certainty and consistency
• New government regulations


  Changes to laws and rules imposed by the government
• Gross domestic product (GDP)


  The total value of goods and services produced in a country
• Inflation


  The loss in value of money, measured by the consumer price index (CPI)
• Interest rate


  The cost of borrowing money, set by the central bank
• Foreign exchange


  The value of a country's currency compared to other currencies
• Demography


  The study of population and its attributes
• Lifestyle and trends


  The way people live and the patterns of behaviour that emerge
• Religion


  Beliefs, customs, and practices related to the supernatural
• Innovations


  New products, services, or processes
• Research and development (R&D)


  Systematic investigation to gain new knowledge
• Technology-related legislation


  Laws and regulations governing the use of technology
• New regulations


  Changes to laws and rules imposed by the government
• Employment trends


  Patterns of change in the job market
• Resource constraints


  Limits on the availability of natural inputs for production
• Environmental regulations


  Laws and rules to protect the environment
• Climate change


  Long-term shifts in global or regional climate patterns
• Greenhouse effect


  The trapping of heat in the atmosphere by greenhouse gases
• Renewable energy


  Energy derived from naturally replenishing sources
• The government has a vital role in each PESTLE factor, not just under the political factor
• Sectors of the economy

  • Agriculture and fishing (primary sector)
  • Industry sector (secondary sector)
  • Service sector (tertiary sector)
• Employment structure of the economy

  • Public sector
  • Private sector
• Five competitive forces


  • Threat of new entrants
  • Bargaining power of suppliers
  • Bargaining power of buyers
  • Threat of substitutes
  • Competitive rivalry
• Threat of new entrants


  Factors that make it difficult for new competitors to enter an industry
• Bargaining power of suppliers


  The ability of suppliers to influence the terms of trade
• Bargaining power of buyers


  The ability of customers to influence the terms of trade
• Threat of substitutes


  The availability of alternative products that can meet the same customer needs