2. Businesses are greatly influenced by their
Environmental analysis is a strategic tool. It is a
process to identify all the external and internal
elements, which can affect the organization’s
There are many strategic analysis tools that a firm
can use, but some are more common. The most
used detailed analysis of the environment is
the PESTLE analysis.
3. The PESTLE Analysis is a framework used to scan the
organization’s external macro environment. The letters stand
for Political, Economic ,Socio-cultural, Technological, Legal
4. PESTEL ANALYSIS-
PESTLE analysis, which is sometimes referred as PEST analysis, is a
concept in marketing principles. Moreover, this concept is used as a
tool by companies to track the environment they’re operating in or
are planning to launch a new project/product/service etc
PESTLE is a mnemonic which in its expanded form denotes
P - Political,
L -Legal and
5. here are certain questions that one needs to ask while
conducting this analysis, which give them an idea of what
things to keep in mind. They are:
• What is the political situation of the country and how can it
affect the industry?
• What are the prevalent economic factors?
• How much importance does culture has in the market and
what are its determinants?
• What technological innovations are likely to pop up and
affect the market structure?
• Are there any current legislations that regulate the industry
or can there be any change in the legislations for the
• What are the environmental concerns for the industry?
6. Political: These factors determine the extent to which a
government may influence the economy or a certain
[For example] a government may impose a new tax or duty
due to which entire revenue generating structures of
organizations might change.
Political factors include-
trade tariffs etc. that a government may levy around
the fiscal year and it may affect the business environment
(economic environment) to a great extent.
7. Governments outlook towards-
1. bank financing
2. Interest rate
3. Exchange rate mechanism
4. Incentives for export
5. Restriction for import
6. Inflation labor policies
Level of government spending
Avenue for capital creation
-size of capital market
-role of regulator
-type of instrument
-nature of investors
9. It refers to rate of new inventions and development,
change in information and mobile technology , changes
in e commerce and government spending on research.
Advantage of technology
New discoveries and innovation
Speed and technology transfer
10. These factors have both internal and external factors
Example- consumer laws,
international trade agreement
merger rules and restrictions
11. These factors include all those that influence or are
determined by the surrounding environment.
This aspect of the PESTLE is crucial for certain
industries particularly for example tourism, farming,
14. The demographic factors of the market in which an organization operates, and
which are used to segment the target population for effective marketing, i.e. it is the
characteristics of a population expressed statistically, such as
average size of a family,
average age at marriage, etc
A census is a collection of the demographic factors associated with every member
of a population.
15. A demographic environment is a set of demographic factors such as gender or
ethnicity. Companies use demographic environments to identify target markets for
specific products or services. Marketers have to take both sides of the demographic
environment coin into account when deciding what strategy to apply.
This practice has both advantages and disadvantages.
When a company looks at a demographic environment, it focuses its attention
on the people who are most likely to buy a product. This is good from the
marketing standpoint because it means the company does not waste money
trying to get people to buy who have no interest in the product.
Branding and Strategy
Demography provides very specific information about different populations.
Once a company has this data, the company can develop well-defined
strategies about how to reach each population -- that is, it tells companies
exactly how to market and develop their brands so people in the demographic
environment will respond.
Trending and Comparison
When companies examine demographic environments, they usually do so under
the same lenses, such as age or gender. By collecting demographic data over
extended periods of time and comparing information from different points,
companies can identify trends within the population.
16. Assumption and Culture
Much of marketing with demographic data is based on assumptions.
Additionally, those assumptions are based largely on the cultural norms
surrounding the company. Demographic information has little meaning unless
marketers examine it with this in mind, as culture has such a large influence on
what those in the demographic environment do.
Populations are never constant. People migrate from place to place, and
people pass away and are born. Subsequently, marketers cannot simply
collect demographic data one time. They have to collect the information
constantly in order to have a realistic picture of what is happening at any
given point. This requires a great deal of effort and means a constant expense
to a business.
Focusing marketing based on demographic information means that a
company may lose potential customers who do not fit the general
demographic mould because the company does not concentrate on attracting
those customers. This includes the loss of sales from people who might buy
the product or service for someone else, as those people might not be aware
the company offers the product or service.
17. Demographic Variables That Affect a Business
There are a number of demographics that can affect a business. Demographics are
various traits that can be used to determine product preferences or buying
behaviours of consumers. Most companies identify their key customers through
these various traits. They then target consumers with like characteristics in their
advertisements and promotions. Targeting consumers with similar demographic
characteristics helps maximize a company's sales and profits.
Income is one demographic variable that can affect businesses. A company's
products usually appeal to certain income groups. For example, premium products
such as high-end women's clothing usually appeal to women with higher incomes.
Conversely, people with comparatively lower incomes are more sensitive to price
and, therefore, may prefer purchasing discount products. Value is a major
determinant in the products they purchase.
People's buying preferences also vary by geographic region, which is another
type of demographic. Those who meet buyers' needs and requirements in certain
geographic regions can earn higher sales and profits. For example, people often
prefer certain food and drink flavours in certain markets. Companies that sell the
flavours consumers desire in various areas are more likely to profit. Those who do
not offer these flavours may risk losing customers to other competitors.
Age is another demographic element that impacts businesses. A
company's products and services are more likely to appeal to certain age
groups. For e.g. Younger people under 35 are often the first consumers to
purchase high-tech products like cell phones, electronic books and video
games. Certain buying groups also have more buying power than others.
Demographics play a crucial role in the success of businesses, as learning
consumer characteristics helps a business owner determine what products
and services to create and how to market them. Future shifts in demographics
also determine what necessary adjustments a business must make to its
Demographics indicate the general characteristics of the population in a
specific region. These characteristics include purchasing power, type of
residence, means of transportation, family status and educational level.
Analyzing these traits allows entrepreneurs to, for example, verify if business
is viable in the region and determine the prices for products and services that
encourage consumer spending. This analysis also helps businesspeople
develop advertising messages and marketing plans that appeal to their target
markets, thus leading to effective campaigns for lead generation.
Demographics consist of statistical and external data, psychographics
encompass behavioural and internal information. Both consumer studies
provide a clear perception of a target market.
19. • An ethical environment supports a positive reputation for any
company while improving the morale of the employees.
• The term business ethics refers to the system of moral principles and
rules of conduct applied to the business.
• Building off the current ethical climate in your company, work to
make improvements and maintain improved ethics for better
• Violations of basic ethics can hurt your business or cost your
company money due to actions such as lawsuits or theft of goods
21. Rise in Technology and Know How
The rise in knowledge levels of countries as newer cultures and
technologies are opened to a particular area are clear.
Their knowledge base also grows and expands simultaneously.
Globalization leads to increased competition. This competition can
be related to product and service cost and price, target market,
technological adaptation, quick response, quick production by
companies etc. When a company produces with less cost and sells
cheaper, it is able to increase its market share.
22. Rise in Opportunities
With a larger number of industries and resources
available, the opportunities for people grow
Rise in Investment Levels
The rise in foreign investment in countries helps
industries and native cities grow at a rapid pace,
and this is something that every nation should be
open to since it is a highly beneficial venture for