Pestle Analysis

Before the half term break, I have learnt what Porter’s Five Forces is. It shows the Micro environment of the industry that the company is in. This week, I have learnt what Pestle Analysis is. To start with, let me first kindly introduce you the detail for Pestle analysis.

 

To come out with, Pestle Analysis is an analysis that shows the external environment of an organization. In briefly explain, it shows the Macro environment. Porter’s Five Forces tells us the competition of the industry with how to fight with other’s not just focusing your competitor. It tells us to look and consider the bargaining power of buyers and sellers. Nevertheless, it’s not enough. It can’t show the effect of the Macro environment. There’s also alternative powers which would affect the whole company. In Pestle Analysis, we can consider six factors, for instance, Political, Economic, Social, Legal, Technical and Environment. In the following, I would like to use an example of a company to introduce you more about this analysis which is not difficult to comprehend at all.

In order to have a good explanation, I would like to choose a global company to explain. I have chosen Apple for this analysis.

Political (1/6):

I bet there are not much political factors that will affect the Apple, vice versa. However, it might have some barriers of their apps. As in China, they are not able to use YouTube, Facebook and whatsapp. Therefore, Apple has to consider those factors and change their market and product line. For instance, they need to cancel those apps to enter China market.

 

Economic (2/6):

In the view of global, the whole economic in the world are facing depression and recession. However, in some country, their economic are improving. Using the example of China again, its market is very big, every company wants to enter this huge market. Due to China’s economic growth, the exchange rate between America and China will change. Chinese people can use a cheaper price to buy Apple’s product. The interest rate of the bank will also affect the consumer’s habit and attitude.

 

Apart from that, due to the high demand for Apple’s product, the labour market in China will increase as most of the production line are in China, the effect of the Economic in both country will affect the production and selling of Apple’s product.

 

Social (3/6):

Apple’s product in the society is affecting so much to our life style. It changes many people’s attitude after their iPhone 4 has launched. And also due to the education in the world is increase, they would like to know more about different products, they would buy more their products. Furthermore, the distribution of income will also affect the selling of Apple’s product. The more the people earn, the most they are willing to buy their products.

 

Technological (4/6):

As more and more company enter the mobile phone market, and they are expanding their market share, they focus more on their own product. Due to the technology factor, more and better and high technology phone has been discovered. Apple produces more products which they had their own patents so that Samsung and other main companies cannot copy their products.

Moreover, the speed of people changing their phone increase rapidly. Therefore, Apple has to increase the productivity and to improve their own products by using new technology.

 

Legal (5/6):

In this part, it talks about law. In reality, Apple controversy that Samsung copy their product and need them to pay a certain amount of money due to the patent. This is because law will protect the patents side which is Apple. This could help Apple in developing their product and protect their product to avoid copying their product.

 

Environment (6/6)

Producing a phone need to use lots of raw material and this will affect the environment. It has affected lots of people living standard. In China, due to the production process, many workers in can’t afford the harsh working hour and little time for rest, they commit suicide by jumping out of the building at night and before they work in the morning.

 

Lastly, producing phones will produces lots of waste and part of the component of the phone are not reusable. They can’t reuse it in the phone. This would produce lots of waste and affect the natural environment.

 

To take these into consideration, there are no circumstance should be ignore the role of Pestle Analysis. To survive and grow, the organization must be responsive to these factors. Even though, this analysis can’t show much about their own management, which cannot show the own company structure, but it is quite useful for a company to get used to it and predict the future change. For furthermore information, you may look at the link below, which is the same as what I have written above.