One instrument to analyse the company’s external environment is the PEST analysis. PEST stands for political, economical, social and technological factors. Two more factors, the legal and environmental factor, are defined within the PESTLE analysis. To explain these environmental factors, it is necessary to say that most of the factors depend on each other and that they change over the years. Consequently, when one factor changes it also affects the others. The equality for every company is the main characteristic of the factors in an environmental analysis. The different environmental factors are covered below.  Political and legal factors
Political and legal factors are here regarded as a unit. They refer to framework given by politics. There exist regulatory or legal frameworks, which can be binding for regions, nations or on an international basis. The frameworks deal with economical issues or issues concerning the labour market.Subsidies for instance fall in the category of economical issues. According to the degree of support through subsidies, a country can be more or less attractive for a company. With respect to the labour law of a country, it can highly influence location decisions, too. If e.g. the dismissal protection in a country is very good, a firm may tend to choose a country with a more flexible hire-and-fire-system. Furthermore, the stability of a political system is a real important aspect for most firms. A social market economy with rights for co-determination, regulations for patents, the company’s investment and environment protection are main characteristics for a political stable system.  Economical factors
Economical factors deal with national or international economical developments and have a direct influence on supplier and consumer markets. Examples of economical factors that play a big role are: the GDP, the rate of inflation, interests, the change rate, employment or the situation of money markets. These economical factors influence demand, competition intensity, cost pressure and the will to invest. For instance, if the gross domestic product of a country is fairly low, the demand is in general lower than in countries with a higher GDP.  Social factors
Social factors deal with social issues regarding the values, ideals, opinions and the culture of market participants. Market participants can be employees, customers or suppliers. Through their contact with the company, they influence it due to their opinions. The company needs to follow the market participant’s change of...