Pestle Analysis

1565 words 7 pages
Application of PESTLE analysis 1. Define the purpose of PESTLE analysis and spell out some of the main constituents of each factor.

PESTLE analysis “Political, Economic, Social, Technological, Legal and Environmental analysis” is used to evaluate the many factors in the macro environment that will affect the decisions of managers in any organisation. It is normally carried out before a SWOT analysis which is applied for assessing an internal environment of a business (Panah, 2012). Government policy, economic growth, social trends, new technologies, new laws and climate change are all examples of macro change. Political factors include tax policy, trade restrictions and tariffs. It’s what the government intends to change in the
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This is a benefit for the business because they have a wider access of skilled workers to choose from; therefore the business is able to save costs by spending less money on training and making less staff redundant. As a result, the business is able to increase competitiveness and profitability of the business.

Businesses are always investing in new technology, whether it is to save costs or to keep current with the consumer’s demand. There is a rising demand in electric vehicles forecasted; as a result, it is important that Alfa Romeo invests money on the research and development of electric vehicles. The initial cost of the new technology can be a minor drawback, as it might be expensive; on the other hand, if successful the business is able to be more efficient in the long term. Ultimately cutting more cost and increasing the competitiveness of the business.

Minimum wage is set to rise steadily in the UK. Therefore when a business such as, Alfa Romeo is planning to locate a manufacturing base in the UK, they may find this as a slight possible drawback, because they are not able to maximise profitably as they might of imagined. On the other hand, this could be beneficial as the employees may feel motivated from their wages to do more work and to produce better quality work, which will lead to the business being more efficient in meeting deadlines, consequently improving competitiveness. As a result, the business is able to use this to


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