In today`s business landscape, technology is everywhere – and it`s evolving rapidly. Management teams and analysts need to understand how technology factors can affect a company or industry. These include, but are not limited to: Common legal factors that companies focus on include: It may seem easy to assume that companies prefer to operate only in democratic, capitalist countries where there is little or no state involvement or intervention. However, history shows that global companies in certain industries have chosen to do business with countries whose governments control that industry. Companies in sectors such as commodities and oil have found more authoritarian governments as more predictable partners for access and long-term investment in these commodities. The complexity of trade in these situations is increasing as governments throughout history have come to the aid and protect their countries` greatest commercial interests in markets around the world. The history of the oil industry shows how various governments have sometimes protected their national companies` access to oil through political violence. In modern times, the Chinese government uses a combination of government loans and investments in Africa to give Chinese companies access to local resources and raw materials. Many business analysts mention these issues in discussions of global business ethics and the role and responsibility of business in various policy environments. Cultural and social factors can also influence a government`s involvement in trade. For example, governments in some countries have attempted to limit the influence of American culture in local markets by restricting or denying entry to U.S. companies operating in the media, food, and music industries. Economic factors are related to the overall economy and are usually explicitly financial in nature.
This is in contrast to more authoritarian governments, where democracy is not in force or is only a symbolic process. China is one of the most visible examples with its strong government and limited individual rights. Over the past two decades, however, China has sought a new balance between state planning and management of the economy. While the government remains the dominant force, controlling more than a third of the economy, more private companies have emerged. China has managed to combine government intervention with private investment to develop a robust, market-oriented economy – all in a communist form of government. This system is commonly referred to as a “socialist market economy with Chinese characteristics”. The Chinese are eager to present their version of combining authoritarian government with a market economy as a better alternative model for emerging economies like those in Africa. This new combination has also raised more questions for companies facing new issues – such as privacy, individual rights and the protection of intellectual property rights – as they try to do business with China, which is now the world`s second-largest economy behind the United States. China`s model of authoritarian government and market economy has sometimes tilted in favor of companies, usually Chinese, that understand how to handle the nuances of this new system. The Chinese government`s control over the internet, for example, has helped boost Chinese search engine Baidu, which generates more than 73 percent of Chinese search engine revenue.
Baidu self-censors and, as a result, has seen its revenue increase after Google scaled back its business in the country. Rolfe Winkler, “Internet Plus China Equals Screaming Baidu,” Wall Street Journal, November 9, 2010, accessed December 21, 2010, online.wsj.com/article/SB10001424052748703514904575602781130437538.html. While theoretically any country can pose a risk to all of these factors, some countries offer a more stable business environment than others. Indeed, political stability is an important part of the government`s efforts to attract foreign investment to its country. Companies need to assess whether a country believes in free markets, government control, or strong intervention (often for the benefit of a few) in the industry. The country`s view of capitalism is also a factor in commercial considerations. In the broadest sense, capitalismAn economic system in which the means of production are owned and controlled by the private sector. is an economic system in which the means of production are privately owned and controlled. In contrast, a planned economy, an economic system in which the government or state directs and controls the economy, including the means and decisions of production. is that in which the government or state directs and controls the economy, including the means and decisions for production. In the past, democratic governments have supported capitalism and authoritarian regimes have tended to adopt a state-controlled approach to managing the economy. The study of political systems is vast and complex.
A political systemThe system of politics and government in a country; It governs a comprehensive set of rules, regulations, institutions and attitudes. is basically the system of politics and government in a country. It governs a comprehensive set of rules, regulations, institutions and attitudes. A key distinguishing feature of political systems is the philosophy of each system regarding the rights of the individual and group, as well as the role of government. The philosophy of any political system affects the policies that govern the local economy and business environment. The speed and scale of technological disruption in today`s business environment is unprecedented and has had a devastating impact on many traditional businesses and industries – think Uber, which is disrupting the transportation industry, or the advent of e-commerce, which is revolutionizing retail as we know it. Social factors may seem like a small consideration compared to more tangible things like interest rates or corporate taxation. Yet they can have a shockingly large impact on entire industries as we know them. Consider how trends toward healthier, more active lifestyles have ushered in the development of connected fitness technologies, as well as many changes in the type of food we eat and how those foods are packaged and marketed. The 6 factors I mentioned above form the acronym PESTEL. Each letter represents a factor.
It is often called PESTLE. PEST follows the first four categories and excludes “environmental” and “legal” factors. PESTLE covers all categories, but exchanges “E” and “L” (environmental and legal factors). A framework for assessing political, economic, social, technological, environmental and legal factors, sometimes referred to as “ecological” factors, involves physical changes. Think less about the work environment – which would apply to communication between employees – and more about how locations are assigned. There are more than thirteen main types of governments, each consisting of several variants. Let`s focus on global modern political philosophies. At one extreme of political philosophies or ideologies is anarchism, a political ideology that claims that individuals should control political activity and that public government is both useless and undesirable, that individuals should control political activity, and that public government is both useless and undesirable. At the other extreme is totalitarianism, a political ideology that claims that every aspect of an individual`s life should be controlled and dictated by a strong central government that claims that every aspect of an individual`s life should be controlled and dictated by a strong central government. In reality, neither extreme exists in its purest form. Instead, most countries have a combination of both, the balance of which often reflects the country`s history, culture, and religion.
This combination is called pluralism, a political ideology that claims that public and private groups are important in a well-functioning political system, that claims that public and private groups are important in a well-functioning political system. Although most countries are politically pluralistic, they may be more inclined to one extreme than the other. Keep in mind that there are many other factors that can affect the success of the business. Evaluation is an individual process. Every company should do this for itself and find the most important drivers of change. You need to identify factors that have strategic and competitive consequences. This is the last factor in the PESTEL framework. These factors neglect the legal elements.
Start-ups often link these elements to the policy framework. Many legal issues can affect a company that does not act responsibly. This step avoids legal pitfalls. They should always remain within the limits of established regulations. In this step, you will learn about the laws and regulations in your area, in other words, how certain laws can affect businesses, ideas or concepts. It is crucial to avoid unnecessary legal fees. They are created by the government, which is why they are sometimes involved in the political part of the PESTEL analysis.