PESTLE ANALYSIS

                                   PESTEL ANALYSIS

The PESTEL analysis, that is the political, environmental, social, technological, economic and legal analysis of a business organisation describes the frame work of macro environmental factors and is a major part of strategic management. Pestle analysis is basically an external audit of an organisations environmental influences and therefore using the information from this audit to make strategic decisions. The purpose of this analysis, as a result is simply to make the organisation aware of its current environment and assess potential changes in the future, due to which the organisation would be in a better position to respond to these changes then its competitors. Hence by understanding the Macro environment in which the organisation operates, makes it possible for the business to take the advantage and opportunities to maximize opportunities and minimize threats for the future.

Further more the PESTEL analysis is important for the following main reasons.Firstly it helps the organisation to spot business opportunities and gives an advanced warning of any significant threats. Secondly it reveals the change in direction within the business environment, this as a result helps the managers organize what they are doing, so that they work with change rather then against it. Therefore the managers can avoid starting new projects that are likely to fail due to external changes in the environment.

For example, opportunities can come from new technologies that help you reach new customers such as the internet, using eCommerce, or maybe a new government policy that lowers the barriers to entry into a market full of potential. While on the other hand threats can include deregulation that exposes the company to competition for instance a shrinking market, or an increase in interest rates can cause problems if an organisation is burdened by debts.

More over now we can see how a PESTEL analysis may be done on a company like APPLE;

Political Factors: Apple used to obtain 52% of its business from outside the US, due to the bad international relations, wars and terrorism Apple might be influenced in a huge way, however the organisation has no control over these factors. Apple also manufactures a number of its product parts from outside the US, for instance China, Ireland, Korea e.t.c. The bad political relation between US and the other world may have extremely bad outcome for the company.

Economic Factors: The global economic crisis had a huge impact on Apple, the inflation rate went high and so did the unemployment rate in the country and since Apple products were viewed as luxury products, the customers started spending less on them. Even the fluctuation in the value of the US dollar has a great impact on Apple as a fall may decrease Apples revenue in the global market.

Social Factors: Apples unique selling point has always been the quality and the designs of its products, thus globalization plays an important role. Due to globalization which is making the world economy a single economy, Apple has been able to mark its self in the world market and hence making customers wanting to spend on its products. Apples products with time have become a product to have for social acceptance, therefore social factors being of much importance to the company.

Technological Factors: Apple has invested largely in its products research and development field and thus, Apples products are at the top of the world market. Due to the drastic change in technology over the years, this factor has become of most importance to the company as the change in technology has decreased the life cycle of the products, therefore newer and better ones are to be made with change in order for the company to succeed in the ever competitive world market.

Legal Factors: Nokia has filed various law suites against Apple, claiming the violation of certain patents, also in China apple is fighting for its right to the ipad trademark.

Therefore if all these factors kept in mind Apple can work according to the changes in these factors and keep moving towards success as it already is.

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