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PESTLE - Coggle Diagram
PESTLE
ECONOMIC
The link between economic growth and average incomes do tend to have an impact on sales of most products dependent on their income elasticity.
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Inflation; as it rises this tends to cause uncertainty and lead to reductions in investment and decisions to expand.
Unemployment; the rate of unemployment increasing will reduce average consumer incomes but make it easier to recruit staff without needing to offer high wages.
TECHNOLOGICAL
Allows new ways of making existing products, lowering costs, improve quality, reliability, durability or recyclability.
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Businesses that see these new technological changes as opportunities will harness them early, however for those without access to it or those who's competitors harness it first, this may impose a threat.
SOCIAL
Changes in social attitudes and behaviour frequently relate to lifestyle trends such as healthy eating, smoking, convenience or an aging population.
this can represent both opportunity and threat to a business while some find their products becoming less desirable as society changes its attitudes others may see it as the chance to innovate and diversify,
POLITICAL
Government policies which encourage investment in infrastructure or exports can represent significant opportunities to some firms.
However, the governments decision into leaving the European Union will impact in various ways such as making it harder to access EU markets, decreasing of the pound, and less foreign investment.
LEGAL
New laws can disrupt existing industries, forcing business to change the way they make products, the materials they use or even banning certain products.
firms directly affected by legal changes may face a strategic change of what appears to be a threat into a opportunity.
ENVIROMENTAL
environmental pressures can be applied to businesses to ensure that their operations do not have a harmful impact on the natural environment, This is generally seen as a threat when imposing a business to change their methods of operation however many businesses see changing their environmental impact as a opportunity for a good reputation.
Also these new changes in operation may adopt more efficient methods that also reduce costs and it can always be used as a USP.
In order for a firm to understand the external environment within which it is operating it may carry out PESTLE analysis. This acronym sets out six main areas of external influences.
An external change that works in favour of a business should be capitalised off of. However an unfavourable should be minimised of impact by adjusting and controlling aspects of the businesses performance in order to cope.