THE PESTEL SYSTEM AND ITS RELEVANCE TO ORGANIZATION
The PESTEL or PESTLE Analysis is an important model theory in United Kingdom, it stand for Political, Economic, Social, Technological, Legal and Environmental component that is use to develop a strategic management system in an organization. It is highly recommended as important factors in an organization to consider the following external component to serve as a determinant in their position they can give a highlighted overview in understanding the growth or decline of business industry in present past and future operation. All organization can simply use the system.
The Macro and Micro analysis pertaining to business may show the strength and weaknesses through simple and complex analysis using all or any other parts of the system for these is highly influential and highly identified components of the industry and of society. Technically the organization can adjust to advance, resume or defer their plan if they found out the one of the component is likely to happen so that the risk of such occurrence may be prevented. Even if a certain business is just newly starting using the PESTEL system can be a vital tool to pursue its business at work; this analysis can set a trend in business with respect to the management or marketing plan of an organization.
Political Factor can be highly considered as a part of management and marketing plan. A certain organization may consider the stability of the rules and regulation of the government for example if a certain business exist in Asia and there is need for expansion in other neighboring countries, considering the political factors we may consider Saudi Arabia as a highly political stable nations rather than Syria or Lebanon or Iran and Iraq the political factor is always at risk and the nation is always at war may be traced through history up to their present times. If a certain political consideration is tough or unstable the organization may defer or deny expansion in such area to look for another consideration or they may not be able to grow in a certain country that lacks such political affluence. Consider what will be its policy, culture, etc?
Economic factor is a consideration in business, the first thing you need to ask would be what is their standing? What would be their inflation consideration? Will they be able to afford my products and services? The way of life of people and their buying power should be economically considered before putting up or establishing a business in such location, or it can also be dependent on your products and services.
Socio-cultural factor is a good consideration of business; they must carefully study their position in the society so they do not put their organization at risk. Consider the following; religion, attitude of the people, the population and their lifestyle. A certain company from China has established a restaurant in the Philippines without investigating their cultural preferences and later found out that they have established their store in a Muslim community who never eat meat, not just their business loses some people even curse them and condemn them for selling meat. They transfer to another location only then they have survived.
Technological factor is vital for competitive advantages of business if they have a strong foundation in technology for example in a production company who uses machineries can spend less overhead and produce more products. Depending on consideration they may adapt a certain technology like computer and other high tech gadget as basic tools to do multi task. The power of the internet and the information it can bring is outrageous they can perform online transaction that is fast, efficient, reliable and most of all it can reach a wider market all over the world. Farmer in Africa have adapted some machinery in Asia that can speed up the production of their crops the result is that they yield more than double of what they expected they also uses various fertilizer to grow their crops.
Legal factor is minimal and open consideration, a certain business old and new should understand their responsibility so as they will not be prevented or discriminated by the government. The following legal factor may affect the company on how they can operate in a certain state if they do not follow such rules example; Health and safety measures, labor law, consumer law and etc. if a certain law has been violated the government may have the rights and obligation to prevent the business from operation.
Environmental factor or environmental risk in business may be hard to prevent and identify natural climate such as storms, earthquake, climate change etc. is highly unexpected but considering the ecological balance and tourism of such location in establishing a business may be favorable to business.