Marketing managers are confronted with many environmental concerns, such as those posed by technology, customers and competitors, ethics and law, the economy, politics, demographics, and social trends. One technique used by organizations to monitor the environment is known as environmental scanning. It allows marketers to understand the current state of the environment, so that the organization can predict trends.
The Macro Environment
There are a number of common approaches for how the external factors, which describe the macro environment, can be identified and examined. These factors indirectly affect the organization but cannot be controlled by it. One approach is the PEST analysis.
The PEST analysis is a political, economic, social, and technological analysis that describes the framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added legal and rearranged the mnemonic to SLEPT; inserting environmental factors expanded it to PESTEL or PESTLE, which is popular in the United Kingdom.
The six environmental factors of the PESTEL analysis are the following:
-Growth in spending power
-Rate of people in a pensionable age
-Recession or boom
-Diet and nutrition
-Expectations of society about the business
-Level of Automation
-Health and safety
-Product labeling labor laws
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