business blog 4-11-2013

This week we mostly focus on how to look at the macro environment of an organization, which we will use the tool, called PESTLE. This PESTLE approach can show the different factors that will affect the organization, each are political, economic, social, technological legal, and environment factor.

Political Factor: The factors that mainly focus on the government’s policies and the intervention from the government, the most common one are the tax policy.  This factor is important because the government always have great influence.

Economic Factor: This is the factor that related to money, finance, market, and rates. This would be one of the major factors that influence the process of decision making for most of the organization. For example, if there is an economic growth, the organization may launch more new products and slightly increase the price.

Social Factor: This factor is related about the impact of the society and the culture. For example, population size and age distribution will affect the organization’s decision making about which product or service they should provide. Also, for the culture part, the factor of trend will have a big impact on the design and demand of the product/service. For example, the trend changed the design of mobile phone, from the tradition phone with keyboard to touch screen, also improved from the phone that only used for calling to a smart phone that you can do everything on it.  

Technological Factor: This is the factor that how the technology influence the organization. Like the research and development activity and the technology advancement. A better technology level can improve the quality of the product; lower the cost of production and leading to more innovation.

Legal Factor: I personally thing this factor is overlapped with the political factor, one of the tiny difference is that the legal factor focus more on how the laws affect the industry. Like the employment law and the consumer law.

Environmental factor: This is the factor that related to the environmental and ecological aspect. For example, climate change and global warming is the most important environmental factor for most of the industries.  

In addition, although the PESTLE analysis is commonly used in the world, I think there is are better approach of analysis, which is the DESTEP analysis (Demographic, economic, social-cultural, technology, ecological and political). I think this is better because the DESTEP is more specific on each factor, and it describe the industry in a wider range.