![]() Remember our earlier example: When urban millennials decide that car ownership is no longer attractive, car manufacturers’ sales are threatened. When using PESTEL to analyze a specific firm’s situation, overlap between different categories of PESTEL factors can sometimes happen just as it can with SWOT. In this case, the letters represent the categories to examine: political factors, economic factors, sociocultural factors, technological factors, environmental factors, and legal factors. PESTEL is a tool that reminds managers to look at several distinct categories in the macro environment. Strategists have developed more discerning tools to examine the external environment. However, they do not usually just think in terms of SWOT. Strategists study the macro environment to learn about facts and trends that may present opportunities or threats to their firms. That is not to say that they do not affect firms or that firm activities cannot affect macro environmental elements both can and do happen, but firms are largely unable to directly change things in the macro environment. Note that the terms contained in the blue ring are all “big-picture” items that exist independently of business activities. In the Exhibit 8.4, the macro environment is indicated in blue. These elements are characteristics of the world at large and are factors that all businesses must contend with, regardless of the industry they are in or type of business they are. ![]() Exhibit 8.4 Components of a Firm’s Environment (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)Ī firm’s macro environment contains elements that can impact the firm but are generally beyond its direct control.
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