Pestel: Economics and Factors

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Marketing Theories – PESTEL Analysis
Posted on May 16, 2012 by admin
Welcome to our Marketing Theories series. In this post we will be looking at the PESTEL Analysis in a bit more detail. A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the macro-environmental(external marketing environment) factors that have an impact on an organisation. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis. PESTEL stands for:

* P – Political
* E – Economic
* S – Social
* T – Technological
* E – Environmental
* L – Legal
Lets look at each of these macro-environmental factors in turn.

All the external environmental factors (PESTEL factors)
Political Factors
These are all about how and to what degree a government intervenes in the economy. This can include – government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on. It is clear from the list above that political factors often have an impact on organisations and how they do business. Organisations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly. Economic Factors

Economic factors have a significant impact on how an organisation does business and also how profitable they are. Factors include – economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on. These factors can further be broken down into macro-economical and micro-economical factors. Macro-economical  factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this. Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C organisations in particular. Social...
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