Guide on How to Write PESTLE Analysis

Guide on How to Write PESTLE Analysis

Nowadays, almost every company can operate in any country, thanks to internationalization and globalization. However, there are certain conditions to consider before opening a branch in a new place. This article from the ‘write my paper‘ service contains an extensive guide on the PESTLE analysis, which is fundamental for understanding the possibilities for entrepreneurship in a country.

Whenever you carry out the PESTLE analysis for business, you automatically get acquainted with the chosen place’s peculiarities. If top managers research beforehand, they might face severe consequences like low profits or even the inability to work under certain circumstances.

What Is PESTEL

PESTEL

Everybody would probably agree that interest rates or health and safety laws affect business regardless of its field and other specific characteristics. Also, political instability can cancel out a country’s positive aspects of high technological awareness. Moreover, inflation rates and buying trends determine the decisions of a business owner who does strategic planning.

All of the factors mentioned above are a drop in the business environment. To avoid chaos, scientists systematized the determinants of the climate where a business operates. Hence, every PESTLE analysis example becomes a detailed critical analysis of the company’s surroundings that affect its performance.

What Are the Components of the PEST

The more concise version of PESTLE analysis is PEST. Although it covers fewer internal and external factors, it still gives factual information about the following determinants:

  1. Political factors

Indeed, political factors are one of the first to consider when entering a new market. If a country can boast its political stability, it instantly becomes attractive to numerous investors worldwide. An entrepreneur wants to be sure that the current government is interested in creating a safe environment for foreigners.

  1. Economic factors

The second influential segment includes economic factors. Everything from interest rates and exchange rates to the percentage of annual economic growth and trade tariffs has an impact. So, naturally, economic instability scares away potential investors.

  1. Social factors

Next, a company’s management assesses social factors. Here, aspects like population growth rate, health consciousness, or age distribution determine the appeal of the business environment. The enterprise needs lots of skilled workers and potential buyers to operate successfully.

  1. Technological factors

Why do technological factors matter for businesses? Let’s say that a company originates from a country where many new technologies, like artificial intelligence, are usual. Adjusting to the new environment could be complicated if the firm chooses a place with fewer technology incentives.

What Is PESTLE Analysis Used For

PESTLE analysis helps calculate possible risks and profits. First, political factors determine whether the country is open to new ventures. Second, economic factors show how prosperous the place is. Third, the category of social factors reflects the demand for a product or service. Finally, the level of technology and legal factors demonstrate how climate change or global warming might affect your business decisions.

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PEST Analysis Examples

Are you looking for a sample paper on PESTLE factors? Here, you can find a suitable PESTLE analysis template highlighting a business’s economic, social, technological, legal, and other factors. Generally, a high-quality PESTLE analysis example includes consumer protection laws, employment laws, or corporate social responsibility. In the current economy, strategic thinking is a good competitive advantage for every specific business. Indeed, all PESTLE components help better understand buying habits, trade restrictions, technological change, etc.

PESTLE Analysis of Apple

Strategic decision-making for a technological giant must include examining political, economic, social, and technological factors. Undeniably, the PESTLE analysis of Apple helps to build a proper business plan for operating in other countries like China.

  1. Political factors

Political stability is one of the essential components of the external environment. While Apple has zero issues with safety regulations or fiscal policies, it may suffer from international conflicts. The trade war between China and USA perfectly illustrates how governments affect companies’ performance. First, China’s decreasing scale of cheap manufacturing leads to higher production costs. Also, both countries raise import taxes, that increase the product cost.

  1. Economic factors

Since Apple products are on the pricey side, determinants like economic growth and purchasing power are important for successful ventures in foreign countries. Nowadays, Asian countries like China demonstrate stable growth of gross domestic product and increasing buying power of their citizens. Consequently, opening new branches in prosperous places might increase profits.

  1. Social factors

Another component of PESTLE analysis for business are social specifics of the target country. For instance, in places like China, population growth rates exceed expectations. Therefore the enterprise gets enough workers and consumers. Moreover, Apple’s marketing efforts make people perceive their products as luxury. So, the buyers’ desire to show high status can boost the demand among the Asian population. However, the US trade war with China may also negatively affect Apple sales.

  1. Technological factors

The next segment of the PESTLE model covers technological advancements. For Apple, external factors like the level of technological development are critical. Companies like Samsung, Xiaomi, and Lenovo fight for bigger market shares by implementing innovations. At the same time, Apple barely comes up with anything revolutionary in their gadgets, so their target audience often chooses other brands.

  1. Legal factors

The legal macro environment often includes safety laws or patent laws and other legislation regarding any business activity. Apple has a strong brand, so to maintain a good public image, this company avoids getting into law scandals. Still, this business takes risks by working with music and software that has copyright and patent protection. In case of a lawsuit, the loyalty of Apple customers may suffer drastically.

  1. Environmental factors

The final segment of the PESTLE analysis studies environmental issues like climate change or environmental regulations. For instance, Apple can generally withstand global warming or other weather changes by placing its factories in safe areas. However, the strict environmental policy of countries like China makes Apple make environmentally friendly choices in its production processes, like ditching lithium batteries. This way, the brand can maintain an even better reputation in the target country.

Overall, the PESTLE analysis has shown the aspects of the macro environment that affect Apple’s performance abroad. In addition, the examination has demonstrated both drawbacks and advantages of the company’s policy. Although Apple has to adjust to the changing environment to stay relevant, it still has multiple strong sides.

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McDonalds PESTLE Analysis

Whenever prominent corporations want to operate in a wider business environment, they study the economic, technological, legal, and environmental state. In other words, a company wants to know what to expect in a new market. The information about  these determinants and even more is available in the Mcdonalds PESTLE analysis:

  1. Political factors

Since Mcdonald’s is the largest and most famous fast food company, most of its concerns connect to food safety. Many countries have stricter safety standards than the US, Mcdonald’s place of origin. For this reason, the corporation has to align with the local legislation or avoid opening branches where losses can exceed profits. More risky regions in terms of policy would be Middle Eastern or Asian countries.

  1. Economic factors

If we talk about the economy as the next criterion of the external environment, the circumstances differ from country to country. As an illustration, the recently slowing economic growth in Eastern Europe is a drawback for the local Mcdonald’s restaurants. On the contrary, the steady growth of the economy in Western Europe and developing countries is a good sign. Nonetheless, employees rarely use Mcdonald’s to satisfy their career attitudes. Therefore, a high employee turnover rate causes losses for the company.

  1. Social factors

Mcdonald’s views cultural preferences as a crucial social factor, so the chain adapts to people’s tastes in different regions. An example of such adaptation is the famous Japanese menu with lots of rice and fish. Likewise, the Indian Mcdonald’s branch caters to the mostly vegetarian tastes of citizens, and so on. However, the trend for a healthy lifestyle and weight loss might threaten the company, so it needs to change its strategy.

  1. Technological factors

In recent years, Mcdonald’s has tried to keep up with worldwide technology trends. This strategy helps the fast food corporation to boost demand in all countries. One of the greatest high-tech implementations was the sensory screens for ordering food. This decision allowed to attract more customers who wanted more menu positions. In the pandemic period, contactless restaurant options became even more topical. Further automatization would be a winning strategy for Mcdonald’s.

  1. Legal factors

One of the biggest legal issues for Mcdonald’s branches worldwide would be changing employment laws, especially the increase of minimum wages. In this case, changes are inevitable, so the management should think of redistributing the profits correctly. Next, it’s the company’s priority to follow the changes in laws of every country. Sometimes, governments ban certain ingredients or toys from Happy Meals.

  1. Environmental factors

Regarding the ecology, the management of Mcdonald’s actively shows their awareness of environmental issues. Becoming more environmentally friendly is the company’s objective. For instance, Mcdonald’s tries to switch to only recyclable packaging to decrease pollution. Also, the local restaurants in many regions prefer to use energy-efficient technologies. Yet, there is an even worse ecology issue, global warming. The changing weather conditions might lead to a shortage of food and disruption of supply chains.

The detailed PESTLE analysis for business helps its top managers make proper decisions on both new and usual markets. Foreseeing the dangers and opportunities is essential for a company’s success.

Coca Cola PESTLE Analysis

Managers interested in discovering new markets have to employ PESTLE analysis for business. As an illustration, Coca Cola PESTLE analysis examines political, economic, social, technological, legal, and environmental conditions.

  1. Political factors

Like any other food or beverage company, Coca-Cola works under country legislation, specifically consumer protection laws, copyright laws, etc. Governments naturally aim to prevent any harmful products from entering the market. Luckily for Coca-Cola, most countries allow their drinks on the shelves of their shops. But, there are circumstances like sanctions, which make trade and investment impossible in certain regions. For Coca-Cola, such restricted areas are Cuba, North Korea, and Russia.

  1. Economic factors

Indeed, the Coca-Cola brand is the first that comes to mind when you think of sweet beverages. This fact is hardly surprising since the company owns half the market share, leaving only fifty percent for all its competitors. Overall, the demand for this drink is steady in most countries, yet some trends can change the situation. As everybody knows, Coca-Cola drink is far from healthy. Consequently, people who shift to a more nutritious low-sugar diet might stop buying the beverage, causing lower profits.

  1. Social factors

Because Coca-Cola operates in so many countries, it has to adjust its marketing strategy to the socio-cultural aspects of every nation. But, by far, its attempts were successful and led to the popularization of the brand worldwide. One of the examples is the creation of unusual tastes in certain countries. Japanese consumers, for instance, highly appreciate the green tea taste and lemon Coke. Besides, Coca-Cola sold bottles with names, and people liked them. So, naturally, sales went up in all regions.

  1. Technological factors

A beverage giant like Coca-Cola manages to draw people’s attention from all age categories, but it mostly caters to the younger generation. So how does this brand attract more consumers in such a competitive market? Coca Cola uses modern technologies to its advantage. Besides working on the drink, the company heavily invests in social media marketing. The hashtags and online games aim to gain more buyers who want to be cool and trendy.

  1. Legal factors

The Coca-Cola Company is famous for the secret formula of its drink. The brand has zero problems with patents or copyright, but the issues emerge from the other side. Coca-Cola is unfortunately notorious for mistreating its workers, who even protested against its unfair policy. What is more, there were even rumors about racial discrimination. So, the company has to work in this direction to clear its image.

  1. Environmental factors

As the biggest soft drinks producer in the world, Coca-Cola faces several accusations from eco-activists. Water shortage is the first problem that arises in places where the company places its factories. Statistically, Coca-Cola is the largest consumer of fresh water, so it drains its supplies everywhere. The issue is especially severe in countries that suffer from droughts, like India. Another problem to work on is plastic pollution due to piles of Coca-Cola bottles. Recyclable materials would be an awesome alternative.

PESTLE analysis for a business like Coca-Cola builds the most efficient strategy. Proper steps help to avoid pitfalls and secure market position.

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PESTLE Analysis for Amazon

Luckily for people who love to shop comfortably, services like Amazon exist to meet their needs. This global leader in e-commerce gains customers’ trust thanks to its smart tactical and strategic plans. The management uses PESTLE analysis for Amazon, which shows the company’s strong and weak sides:

  1. Political factors

Paving the way into multiple countries’ markets means dealing with the local political environment. On the one hand, Amazon thrives in developed regions that can boast political stability. However, on the other hand, unpredictable environments like Eastern Europe or the Middle East threaten the company’s activity. Furthermore, rising foreign trade taxes may affect Amazon, like the cybersecurity failure.

  1. Economic factors

Sometimes, high prices for the products, together with increasing shipping costs, scare away company clients. This issue is topical for Amazon, especially in developing countries. However, automatizing the processes can help this company save costs and set lower prices. A more influential factor for Amazon is competition with Aliexpress or Walmart. They have the potential to take over the market in Asian countries and the USA correspondingly.

  1. Social factors

Depending on the average income, Amazon sales might differ from country to country. More developed countries generally have a bigger percentage of citizens who use e-commerce. Furthermore, online shopping has become a large cultural phenomenon since the beginning of lockdowns. As a result, people got used to receiving their packages without going outside, which positively affected Amazon’s revenues. At the same time, too many company employees are losing their jobs because of automatization, which is a negative factor.

  1. Technological factors

Technology and innovations are sure something that Amazon implements where it is possible. Since delivery is the company’s main service, the management attempts to make the process more efficient. Everything here revolves around creativity. Customers from developed regions can even receive groceries through drones. Another improvement is the possibility to talk to customer service through live chats or e-mails. Overall, Amazon constantly invests in its R&D department.

  1. Legal factors

Legal matters are one of the most complicated, as every country has different requirements for foreign business activity. Amazon strictly follows consumer and employment laws to avoid tarnishing its reputation and bearing losses. Still, there are controversial situations where this business has to change its strategy. First, the counterfeit accusations can obstruct Amazon’s activity. Selling fake goods is legally punishable in most countries. Also, governments might suspect that Amazon collects consumer data underhandedly.

  1. Environmental factors

The examination of Amazon’s ecological strategy proves that this business cares about its effect on the environment. Even though e-commerce produces fewer emissions than shopping in brick-and-mortar shops, the change is still necessary. To become more environmentally friendly, Amazon encourages its clients to choose longer delivery options since quick shipment is bad for the ecology. Such initiatives improve the brand image and strengthen customer loyalty.

Altogether Amazons PESTLE analysis digs out the needed information about the company’s activity. The final objective is to assess the effect of the environment on this brand and to find the best solutions for arising issues.

How do PESTLE Factors Affect a Business

Indeed, the lack of market research usually backfires with the sudden obstacles in the company’s way. Our economics essay writing service recommends using PESTLE analysis for businesses to make efficient decisions. Originally, every PESTLE analysis template contained several factors influencing companies worldwide. Like so, political circumstances might encourage or prohibit a firm from working in a country by enforcing the law, which is another category.

Next, economic strength impacts the demand for products and prices for raw materials. On top of that, socio-cultural specifics determine whether the s and services can be popular. Another subject of analysis is the level of technology, which should be enough for an innovative enterprise. Finally, the state of local ecology affects foreign business too. The company must be responsible for any potential harm to nature.

SWOT and PESTLE: Difference

SWOT vs PEST

You could have heard of two equally popular abbreviations, SWOT and PESTLE. In a nutshell, both of them relate to business and marketing. At first, these frameworks might seem a bit similar, but they do differ. For instance, if you look at the PESTLE analysis definition, you can see that it covers only the macro environment where a business operates. At the same time, SWOT examines internal factors like strengths and weaknesses and external determinants like opportunities and threats.

How does our admission essay service compare the two methods? The thing is, both of them are essential. It is worth mentioning that SWOT analysis suits new brands and products more, while PESTLE analysis works better for expanding businesses.

Why Is PEST Analysis Useful for Business

Granted that company owners think of expansion, they have to consider everything. In such situations, PESTLE analysis for business is an awesome way to study unknown markets. The framework covers every detail that can potentially boost or disrupt business activity. On the contrary, superficial analysis is ineffective as it often misses economic, cultural, or legal specifics. Moreover, changes can happen overnight, so PESTLE analysis should be recurring.

A key goal of the market examination is minimizing dangers for a company. Analyzing the current situation in a country, along with its previous experiences, gives a hint of future events. However, certain circumstances, like natural disasters or international conflicts, are impossible to predict. That is why management should have a backup plan just in case.

In conclusion, any PESTLE analysis template gives companies recommendations regarding their foreign strategy. Furthermore, the study is thorough, so you can get help from a business essay writing service that always finishes work on time. Finally, preparation gives a clear view of the best direction for a company in a world of endless possibilities.

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