Macro Environment

Question 1

What can PESTEL analysis be used for?

Answer 1

To analyse the macro environment for opportunities and threats

Question 2

What does PESTEL stand for?

Answer 2

Political, Economic, Social, Technological, Environmental and Legal

Question 3

PESTEL - Potential Political issues

Answer 3

Taxation policy
Government spending
Foreign trade regulations

Question 4

PESTEL - Potential Economic issues

Answer 4

Economic growth
Exchange/interest rates
Inflation

Question 5

PESTEL - Potential Social and Demographic issues

Answer 5

Attitudes, tastes and fashion
Population demographics
Income distribution

Question 6

PESTEL - Potential Technological issues

Answer 6

New products
Improved production methods
Rate of obsolescence

Question 7

PESTEL - Potential Ecological (environmental) issues

Answer 7

Sustainability
Pollution and climate change
Natural capital impact

Question 8

PESTEL - Potential Legal issues

Answer 8

Industry regulation
Competition legislation
Employment law

Question 9

What can Porter’s diamond be used for?

Answer 9

To explain why some nations have a competitive advantage in certain industries

Question 10

What are the 4 determinants of Porter’s diamond?

Answer 10

Demand conditions
Strategy, structure and rivalry
Related and supporting industry
Factor conditions

Question 11

Porter’s Diamond - Factor conditions

Answer 11

The availability of the factors of production (human resources, physical resources, knowledge etc)
E.g. French wine with good grapes

Question 12

Porter’s Diamond - Demand conditions

Answer 12

Demanding local consumers force firms to become innovative
E.g. German drivers demand powerful cars

Question 13

Porter’s Diamond - Realted and supporting industries

Answer 13

Leads to easy access of components and encourages knowledge sharing
E.g. Finance sector in UK aided by large accountancy firms

Question 14

Porter’s Diamond - Strategy, structure and rivalry

Answer 14

Forces firms to become more effective to survive