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PESTEL Framework - Coggle Diagram
PESTEL Framework
A framework that categorises and analyses an important set of external factors that might impinge upon a firm. These factors can create both opportunities and threats for the firm
Political Factors
Political factors result from the pressure that various groups such as government bodies, NGOs, and social movements can exert to influence the decisions and behaviours of firms
NGOs
Amnesty International, Greenpeace, National Rifle Association(NRA)
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Political Pressure
An expression of certain groups' expectations, and it happens before any legal changes occur
Because political pressure often results in legal changes, political and legal factors are closely linked
Political pressure resulted in the Fourteenth amendment (Same-sex marriage in the US), and now it is illegal for a company to exclude a same-sex spouse from health benefits as an employee's dependent if the same benefits are available to an opposite-sex spouse
Nonmarket Strategy
Strategic leaders' activities outside market exchanges to influence a firm's general environment through such activities as lobbying. public relations, contributions, and litigation that will lead to favorable outcomes for the firm
Economic Factors
Economic factors in a firm's external environment are largely macroeconomic, affecting economy-wide phenomena
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Sociocultural factors
Captures a society's cultures, norms, and values
As they are constantly in flux and differ across groups, strategic leaders need to closely monitor such trends and consider implications for firm strategy
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Caveats
It is a static model, taking a snapshot of many moving parts at a given point of time
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Ecological Factors
Concerns broad environmental issues such as the natural environment, climate change, and sustainable economic growth
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Externalities
Occurs when the production or consumption of good and services imposes costs on or provides benefits to others, but the prices of the goods and services do not capture these costs and benefits
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Legal Factors
Captures the official outcomes of political processes as manifested in laws, mandates, regulations, and court decisions
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GDPR
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To continue doing business in Europe, all U.S. companies had to change their policies to comply with the GDPR
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