The PESTEL!

After getting familiar with the theory of the Porter’s five forces, we started how to analyze the macro environment by the PESTEL. The PESTEL is a technique for identifying and listing the political, economic, social, technological, environmental and legal factors in the environment most relevant to an organization. These are all factors that would affect all industries. At first, I found them a little bit vague as I was not quite sure about the political and legal factors for most of the industries. 

After looking through the powerpoint slides flipping through the book, I started to have more understanding towards PESTEL. For POLITICAL, it can be affected by the taxation policy, privatisation/ deregulation policies, environmental legislation, health and safety regulations, public expenditure controls. For ECONOMIC, it can be affected by interest and inflation rates, consumer confidence, unemployment rates, disposable incomes, labour costs. For SOCIO-CULTURAL, it can be affected by the demographics, changing lifestyles or changing consumer preferences. For TECHNOLOGY, it can be affected by the changing communications technology, new production technology, scientific discoveries...  For ENVIRONMENTAL, it can be affected by climate change, energy consumption. 

During the Friday’s study group lesson, we were asked to apply this into real-life examples. We are asked to analyze the mobile phone industry with PESTEL and write them on the whiteboard. This is what we have drawn after discussing.

That's what we have written on the whiteboard at the end!!!! This diagram shows our understanding towards the mobile phone industry. At first, we found it difficult to classify our points into different aspects as some of the points can legally or politically affected. Moreover, it was quite challenging for us to figure out factors in terms of political, economic, social-cultural, technology, environment and legal as some of the factors may not be the strong arguments that would cause an impact on mobile phone industry, for instance, I don't think the reasons in terms of environments as well as political would be the major reasons causing an impact to the industry. For environment, we think that the mobile phone industry may be affected due to the reason of increasing concerns towards green issues. People may think using smartphones would waste energy consumption and as a result not choosing smartphones. For political, we think that the mobile phone industry may be caused by the new rules or regulations such as minimum wages or changing working hours. These two are reasons that are not strong enough. 

At the end, we came up to the conclusion that the major factors that would cause effect on mobile phone industry is the advanced technology and people's changing of lifestyle. Thanks to the invention of smartphones, people are now able to enjoy the new features such as different kinds of apps and application. It brings people convenience and it is really entertaining as well. This attracts more and more people to purchase smartphones. Besides, the changing lifestyle is also a reason that contributes to the rising profit of mobile phone industry. People start to rely so much on their smartphones to surf the internet. It is not only the young ones' habit to spend so much time on social networking websites, but also the older ones. Almost everyone is now owning a smartphone. Whenever people around us start to purchase a new model, we will follow suit. These two reasons would be the main factors affecting the mobile phone industry. After drawing this PESTEL diagram with my group mates, I have more knowledge about the mobile phone industry and also acknowledging how to analyse an industry with PESTEL.

At last, I would like to share this video since it is really educational and meaningful that it explains the ways of analysing PESTEL clearly.