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The Shireburn Business Masterclass 2: PESTEL

July 2, 2015

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To view the Shireburn Business Masterclass Session 1 – SWOT, click here.

In this second business masterclass session, we will look at another business tool used in boardrooms across the world. PESTEL is a strategic management tool allowing us to assess the macro-environment factors in which we do business by looking at the individual components that make up our environment.

PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal. Together, these 6 constituents make up the macro-environment. We can use PESTEL to examine each of the factors as an assessment of the opportunities and threats our organisation is facing. PESTEL is a useful exercise to carry out in both the market we operate in and any market we are looking to penetrate when expanding operations as an initial assessment tool. Here we will look at each factor in more detail and what it means in relation to the bigger picture.

Political

Political refers to the degree of control the local government tends to exercise over the business sphere. Is it an open market or is it heavily regulated? Is there political stability or is there turmoil? What policies are in place that could hinder or perhaps help operations? (Think tax, trade, labour and environmental laws). Are there any incentives that could facilitate the go-to-market / growth strategy? Entities like Business First and Take Off Business Incubator help businesses during growth phases and can offer advice and incentives to succeed.

Economic

The economic situation plays an incredibly vast role in the market and our go-to-market strategy. The economic segment of the exercise includes a number of factors including disposable income, employment rate, inflation and interest rates.

The economic temperature of a market will dictate what can and cannot work, making it important to know what is going on now and what is likely to happen in the near future. Looking at local bonds and stocks can help you understand the market sentiment whether bearish or bullish as an indicator of the economic outlook.

Social

Social dynamics play an important role in business, more so as customers expect to deal with people instead of business entities. Social factors determine the accessibility of the target market looking at age distribution, demographics and trends. The NSO in Malta carries out valuable surveys which can help you understand many of the social factors that dictate the market.

Technological

Technology can be a great business enabler, facilitating anything from research and production to marketing and after-sales. Each market might have a different uptake when it comes to technological innovation and its use can facilitate or hinder entering the market. The Malta Communications Authority (MCA) carry out frequent surveys on internet and communications users, helping you understand technology uptake among the populace.

Environmental

Whilst environmental factors are a fairly recent inclusion, they are an important addition with regulations ensuring little to no impact on the environment. From disposal and energy consumption regulations to environment protection laws, an environment impact assessment goes a long way with non-compliance resulting in hefty fines.

Legal

In any given market, there are laws and directives that control certain aspects of the market. These legal requirements can vary from market to market and jurisdiction to jurisdiction. All of Malta’s laws are available online in a searchable format on the Justice Services website. It is always advisable to confirm your findings with a lawyer, but the research will help you understand potential issues before investing further in your ideas.

And finally if you’re looking to improve your processes and take your business up a notch, have a look at what we offer, or contact us with your requirements.



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