Pestle Tool

Topics: Minimum wage, Economics, Hotel Pages: 8 (1522 words) Published: July 23, 2011






COURSE- MBA (Hospitality Management)


Tutor – Don Burton

➢ What is the PESTLE tool?

PESTLE stands for Political Economic, Social, Technological, Legal and Environmental factors. PESTLE is to find out the businesses current position of any organisation in their external environment. PESTLE can be used as a basis for further planning and strategic management. Kotler (1998) “claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations”.

PESTLE analysis is in effect an audit of an organisation's environmental influences with the purpose of using this information to guide strategic decision-making. The assumption is that if the organisation is able to audit its current environment and assess potential changes, it will be better placed than its competitors to respond to changes.

➢ Why PESTLE is a key concept in understanding the Business Environment?

• Proves to be a flexible and easy to understand tool in the context of strategic planning for business.

• Encourages the development of external and strategic thinking.

• It Can enable an organisation to anticipate future business threats and take action to avoid or minimise their impact.

• It Can enable an organisation to spot business opportunities and exploit them fully.

• It ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world

• PESTLE is very useful when a business starts operating in a new country or region.

• It helps to quickly adapt to the realities of the new environment.

• A PESTLE analysis is a useful tool for understanding the ‘big picture’ of the business environment in which an organisation is operating.

• A good PESTLE analysis means a business can take advantage of the trends and changes in the market place

PESTLE for Hospitality Industry

➢ Political Factors

The political factors has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses.

• Political stability
• Risk of military invasion
• Legal Framework for conduct enforcement
• Intellectual property protection
• Trade regulations & tariffs
• Favoured trading partners
• Anti-trust laws
• Pricing regulations
• Taxation – tax rates and incentives
• Wage legislation – minimum wage and overtime
• Work week
• Mandatory employee benefits
• Industrial safety regulations
• Product labelling requirements

For example:

• Work permit is essential in UK for overseas staff. Impact on hotel industry is that they abide by the rules and regulations by the government. It would definitely help reduce staff turnover as the Permit clause itself says “can work in hotel industry only” moreover to transfer Permits is a great deal of paperwork which most of the other hotels would refrain from.

• Asia Pacific is the region where politics are non-stable. Situations, such as Taiwan calling for independence for mainland China, nuclear threat was detected imposed by North Korea and its hostile attitude towards the United States, could be the major problems that affect hotels and travel industry.

• Travellers would feel insecure to travel to countries or regions where there are high possibilities of unsafe political movement like Pakistan & Iraq. On the other hand, when the political situation is peaceful like India & UK , it will boost the economy of the country.

• Nightclubs play a more important role in leisure activities that are outside of the law. The stats show that the government has traditionally sought to tackle some of the potentially harmful social activities such as gambling and alcohol consumption, whilst encouraging activities with social or economic benefits such as tourism. Another important issue for the licensed trade is that of...
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