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Pestle analysis

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Pestle analysis

Political factors compose the stability of political environment and policies of political parties and movements in the in the area of business operation. Political factors can interfere with aspects that directly affect business. For example, they can influence tax policies or government’s engagement in trading agreements. A firm should examine the political factors in order to identify opportunities and risks in a particular market posed by the political factors. Forecasting and planning can always be modified with comprehensive knowledge of these factors.
Economic factors include economic growth rates, employment levels, unemployment, costs of raw materials such as petrol and steel, interest rates and monetary policies, inflation rates and exchange rates. These factors directly affect business. Despite varying from one country to another, these factors are highly susceptible to change. For example, the economy undergoes a series of fluctuations that are linked to booms and slumps in economic activity. During boom, almost all firms gain while most firms lose out during slump. A comprehensive study on economic factors can enable a business to gain insight on the risks involved in particular market and decide whether to take the risks and expand to the region. For example, a proper examination would reveal whether economic conditions are right or not. If they are right, the risk involved will subsequently be low, and the firm may incorporate these favorable in its forecasting and planning.