What is PESTEL Analysis? Examples, templates and PESTEL analysis in marketing Explained with the examples of 3 popular multinational companies

0
(0)

PESTEL Analysis:

Many times, the terminologies scare you isn’t it? I was scared when one of my professors dropped a word PESTEL analysis and did not explain what it is all about. During the 2000’s I was not very comfortable in using the internet and the search engines were not so good in recommendations.

In this blog, I will explain about what is PESTEL analysis?, PESTEL analysis templates, PESTEL analysis examples, and procedure to conduct PESTEL analysis in marketing. Let me explain what is PESTEL analysis with the background and its context to the contemporary world. In this article, we will explore Accenture Inc and Unilever Inc UK examples to explain the topic.

What is PESTEL Analysis?, PESTEL Analysis examples,PESTEL Analysis templates, PESTEL Analysis in marketing, How to do a PESTEL analysis?
What is PESTEL Analysis?

The business world is changing every day and new things and services produced in the market just in a matter of a few seconds. The business encounter changes constantly in which a few are controllable in the hands of business stakeholders while many macro factors are uncontrollable. Due to this reason, the businesses need to keep identifying the trends of the market to align its strategies.

Environmental Scanning

Every business environment is accountable for the environment that it establishes. The composition and operations of the organization are directly affected by the environment. Hence, it is the basic objective of a business to understand how its operations are affected by the environment and take necessary measures to get positive outcomes. In this context environmental scanning is essential for a business to understand what is for and against the business operations.

Environmental scanning is a practice of collecting, analyzing, and distributing data for tactical or planned functions. It necessitates acquiring both objective and subjective data on the business environments in which a business operates. The environmental scanning can be accomplished in numerous ways, but three crucial ways of scanning environment are provided below:

What is PESTEL Analysis?, PESTEL Analysis examples,PESTEL Analysis templates, PESTEL Analysis in marketing, How to do a PESTEL analysis?
Environmental Scanning – PESTEL Analysis
  • Ad-hoc Scanning:  Ad-hoc scanning is a sudden and unexpected scanning used mostly during a crisis or some sort of emergencies.
  • Regular Scanning: In Planning, the scanning process is conducted regularly usually to trace business patterns in a duration.
  • Continuous Scanning: This is an enduring process and stays in a constant state, has a wide range of gamut.

Examination of the Macro factors using PESTEL Analysis – Woolworth’s example

In this section, let us examine PESTEL analysis examples for better clarity on the topic. We will also see PESTEL Analysis templates that captures the details for the company.

PESTEL is an abbreviation that stands for Political, Economic, Social, Technological, Environmental, and Legal factors. A PESTEL Analysis previously known as PEST analysis is a context used to evaluate macro-environmental considerations that would have an overwhelming impact on organizational performance. This tool is particularly useful when introducing a new company or moves into an overseas market.  It is frequently used in association with other diagnostic business tools such as Porter’s Five Forces and SWOT analysis.

What is PESTEL Analysis?, PESTEL Analysis examples,PESTEL Analysis templates, PESTEL Analysis in marketing, How to do a PESTEL analysis?
PESTEL Analysis examples

 PESTEL analysis is a cornerstone of environmental perusing which gives entrepreneurs an edge in terms of understanding the potential opportunities and possible threats. Like Porter’s model, a PESTEL analysis considers beyond the organization to the contiguous environment. Still, contrasting the Five Forces model, which converges on the industry which encompasses a company, a PESTEL analysis appears at the macro environment beyond the industry. The company’s macro environment depends largely on Political factors, legal factors, economic and social factors. Let us understand PESTEL analysis with Australian FMCG giant, Woolworths.

 

What is PESTEL Analysis?
PESTEL Analysis in marketing
  1.   Political Factors

The political factors in PESTEL analysis describe the degree to which the Australian government intervenes in the operations of a business and to what extent. The intervention may include, political stability, policy changes, labor law, foreign trade policy, etc. Woolworths required to get updated with the new regulations so that the best governance can be ensured.

  1.   Economic Factors

Current economic situations in Australia may impact on the spending pattern of people. The rising rate of the unemployment rate, rising interest rates may squeeze the economy. Because, when there is no or less employment, the spending power of people turns downward. They may decide to spend less on luxury products, less consumption of costly food and food items. The weak spending power of individuals may hit the food retail business to bend on their knees.  Further, raising the inflation rate would push the prices of products upward which, in turn, end in a lower volume of sales.

According to a recent survey, Australia is the second wealthiest nation in the world that increased economic activities during the second quarter of 2018. It is a good sign that the unemployment rate decreased to six-year low and CPI rose since income tax rates were slashed. The economy has performed well in the second half of 2018. The level of consumer spending is increasing which is also a good sign for food retails. The healthy growth in retail sales, employment generation, and declining house prices are some of the good signs in Australia.

  1.   Social Factors

The social factors are individual beliefs, demographic patterns, attributes and norms, and so on. These factors include religion, color, sex, population, age, norms, etc. The demographic aspects in Australia are subject to change.

One of the surveys conducted by Ray Morgan (2017) reveals that a few Australians face social issues in their personal life. Some of the most important social issues faced by Australians are listed below:

What is PESTEL Analysis?, PESTEL Analysis examples,PESTEL Analysis templates, PESTEL Analysis in marketing, How to do a PESTEL analysis?
Social issues faced by Australians – PESTEL Analysis

Social issues faced by Australians

  1.   Technological Factors

Technology has been advancing to great heights. Every sector has witnessed innovation in new technology bring new features and designs. However, adopting new technology in operations is not an easy job. The company must evaluate all its advantages and limitations under the shadow of legal and regulatory aspects.  Further, embracing new technology in the early stages may bring certain advantages to the company. This is called a first-mover advantage.

Technological factors include:

  •         Innovative ways of generating goods and services
  •         Innovative ways of promotion and distribution
  •         Innovative ways of connecting with target consumers.
  1.   Environmental Factors

Woolworths is highly conscious of its conduct related to the environment and continuously attempting to become eco-friendly. The company has already taken initiatives related to the following aspects:

  •         The company’s waste is managed systematically and sent to landfill.
  •         Systematic water management procedures in place.
  •         The company is using energy-efficient systems in the plant. 
  1.   Legal Factors

Any business firm is required to adhere to the legal aspects of the country. Woolworths being a big retail player in Australia is not an exception to the legal aspects of the country. New Zealand and Australia being countries that have been enjoying stable political conditions. 

Now let us understand PESTEL analysis with some examples. You can also view PESTEL analysis templates in the following sections. How to do PESTEL analysis is running in your mind, don’t worry,  We will see Accenture and Unilever, and Woolworth’s examples to understand PESTEL analysis. Also we will see the implementation of PESTEL Analysis in marketing.  Scroll down.

 Note: In this article, I will show only Political and Economical aspects of PESTEL analysis. The rest will be discussed in our next article.

Accenture (UK) Ltd

External Macro Factors Impact on the Organization’s

Business Situation

Impact on Organizational Sustainability Impact on Organization’s Future Outlook
Political There are chances of Brexit impact on the operations of Accenture A major portion of the revenue is coming from the UK. Brexit may seriously hit the revenues and put the company’s position into the trouble. Accenture has its base in Ireland and may shift some of the overseas to Dublin to manage the uncertainties.
Economic Economic factors such as GDP, Inflation rate, foreign exchange rate, and interest rates have a direct impact on the performance of the company. If the country doesn’t provide incentives and facilities for information technology services survival is not easy. Stable economic and political situation supports the company’s growth. One economic crisis is sufficient to crush the whole company

PESTEL Analysis: Political and Economic analysis of Accenture Inc

 Unilever Inc UK

External Macro Factors Impact on the Organization’s

Business Situation

Impact on Organizational Sustainability Impact on Organization’s Future Outlook
 

 

 

 

 

 

 

Political

The British tax agencies submitted a 141 million euros assert to Unilever for the tax that the company paid incorrectly in the Netherlands. The British authorities have moved a petition against Unilever to recover the tax that was paid towards Netherland. Unilever resisted the assertion and began a process in which the British and Netherland governments require to talk to each other to avoid the company paying tax on the same profits in both the countries. Should the British Government win this case, Unilever anticipates recovering at least 174 million euros from the Netherland tax agencies.

 

The aggressive approach of the British tax agencies would certainly irk the company. However, since major establishments of Dutch Unilever had been based in London, it is better for Unilever pay taxes in London and upholds its presence in the U.K 
 

 

 

 

 

 

Economic

Unilever’s multimillion-pound contribution of sanitizers, soaps, and surface cleaners to the U.K.’s global coronavirus retort is being made at retail price. It would affect the bottom-line of the business. The intrinsic worth of the donation is considered a smaller amount, as retail prices are typically higher than the cost of making to allow for profits by both the company and merchants. The company’s initiative to offer these products at retail prices would certainly be discounted under corporate social responsibility. It is a good gesture of an FMCG giant towards the society when the entire world is fighting against the pandemic. Any such initiatives of the company would generate long term value for the business.

PESTEL Analysis: Political and Economical analysis of Unilever Inc. UK

 Conclusion

The PESTEL analysis reflects the signals of opportunities that a company is expected to see and possible encounters in earning those opportunities. The rising health consciousness is one of the major factors that Unilever requires to consider. Further, the company requires to focus on automating the processes which otherwise invite substantial cost pressure on the company. Accenture is the largest consulting firm that has been strengthening its operations in the United Kingdom. The company is continuously altering its size and scope to adjust to the changing business environment in the United Kingdom.

 

Hope the concept of PESTEL Analysis through these case studies was helpful. If you want to understand more about PESTEL analysis, please check out this article. 

 

Other related articles:

 

Follow us on Facebook: Billionaire Sayings

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

About Pavan kumar C

Pavankumar Chandrappa is an excellent academic writer, learning designer, research scholar, and blogger in the management domain. He has more than a decade of blended experience in academia and industry with great exposure to writing on various paradigms of business management. He has published a series of research papers on various paradigms of learning. You can access his detailed biography by typing"Pavankumar Chandrappa" on google search.

Check Also

Credit Card Debt: 9 Tips to Pay Off Your Credit Card Debt Fast

0 (0) How to Pay Off Credit Card Debt A credit card is a wonderful …

Leave a Reply

Your email address will not be published. Required fields are marked *