PESTEL Study- Business Expansion Plans

Every business has to take strategic and important decisions based on research reports. One such decision making done using research is related to business expansion or starting a new business in a different geography. Whenever there is rapid or major change in a geographical area, there are likely to be new opportunities and threats that arise from it.

Smart business people and companies come forward to take advantage of the opportunities and manage to conquer the threats. One such tool for this decision making is – the PESTEL study. It is known by many other names like STEEP, PEST etc and is used by business managers worldwide to build the vision of their future in different countries.

Thus the use of PESTEL analysis is considered as an effective tool for business and strategic planning, marketing planning, business and product development and for generating research reports. A good PESTEL study also ensures that your company’s performance is aligned positively with the powerful forces of change that are affecting the general business environment

What is the PESTEL Model?
PESTEL Model is a simple yet important and widely used tool that helps any business to understand the big picture of the Political, Economic, Socio-Cultural, and Technological, Environmental & Legal issues where it is operating or planning to operate.

Why PESTEL analysis is important?
The study of PESTEL is important for the following main reasons- it helps existing businesses to understand the change factors and align themselves positively to it, helps in thoughtful decision making, and is helpful especially when a new business unit is planned to be operated in an foreign environment.

Use of PESTEL helps business managers to break free of unconscious assumptions, and thus quickly adapt to the realities of the new environment. It further helps in justifying the need, importance, acceptability, future effectiveness and successful completion of any new business project being undertaken especially in a new environment or for a product that will be a new addition to the current business product line.

Political factors include- Government type and stability, freedom of press, rule of law and levels of bureaucracy and corruption, business regulations, tax policy, trade and tariff controls etc

Economic factors include- economic growth, inflation, interest rates, labor supply & costs, disposable income and income distribution etc

Socio-Cultural factors include- Population growth rate, age profile, health, education and social mobility, attitudes to work, press attitudes, public opinion, social attitudes and social taboos etc

Technological factors include- emerging technologies, Internet application, communications costs, impact of technology transfer etc
Environmental factors include- weather, geographical terrain study, availability of natural resources etc

Legal factors include – Laws such as consumer law, antitrust law, employment law, discrimination law, and health & safety law etc.

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