Some approaches will add in extra factors, such as International, or remove some to reduce it to PEST. However, these are all merely variations on a theme. The important principle is identifying the key factors from the wider, uncontrollable external environment that might affect the organization The PESTLE Factors We start with the Political forces.
In the case of Amazon, the conditions of the online retail market are considered. As the largest firm in the market, the company enjoys the benefits of high revenues and a popular set of online services. However, the online retail market is dynamic, creating new challenges for Amazon over time. It is essential for the company to maintain resilience and competence in addressing such challenges.
This condition creates an opportunity for the company to expand or diversify its business in developed countries. For example, Amazon could expand its brick-and-mortar bookstore operations in the United States to complement its e-commerce business.
On the other hand, overall governmental support for e-commerce is also an opportunity. Amazon could continue expanding in markets with such governmental support.
However, this external factor also threatens the company because of rising competition. For example, with governmental support, Chinese online retail firms are expanding their operations.
Nonetheless, governments present improved business conditions through efforts in fighting cybercrime. Economic Factors Important to Amazon.
In the case of Amazon. Economic stability of most developed markets opportunity Increasing disposable income in developing countries opportunity Potential economic recession of China threat The economic stability of most developed countries increases the likelihood of success for Amazon.
Amazon has other growth opportunities in developing countries. The Chinese market is one of the biggest markets that the company hopes to increasingly penetrate.
Amazon must consider the following sociocultural external factors: Increasing wealth disparity threat Increasing consumerism in developing countries opportunity Increasing online buying habits opportunity The increasing wealth disparity refers to the increasing gap between the rich and the poor in many countries.
This condition threatens Amazon.
A higher disposal income level is more favorable in increasing potential revenues of the e-commerce company. Nonetheless, an increasing degree of consumerism creates opportunities for Amazon.
In relation, the company stands to benefit from increasing online buying habits, as more people around the world gain access to the Internet. The technological external factors important in Amazon.
However, this condition is also an opportunity in optimizing the business. Amazon also has opportunities to further improve its performance based on the rapid increase of IT efficiency. For instance, new technologies can maximize online retail productivity and minimize operational costs.
However, the company also faces the constant threat of cybercrime. Amazon considers the following ecological external factors in its strategic formulation: Rising interest in environmental programs opportunity Rising emphasis on business sustainability opportunity Increasing popularity of low-carbon lifestyles opportunity Amazon has opportunities to improve its environmental impact in response to the rising interest in environmental programs.
In relation, there are major opportunities in business sustainability. For instance, the company could implement higher sustainability standards to further enhance its strong brand image as an e-commerce organization [Read: Moreover, the increasing popularity of low-carbon lifestyles provides opportunities for Amazon.
The company could implement extensive energy-saving policies in its operations for this purpose.
Rising product regulation opportunity Easing of import and export regulations opportunity Rising environmental protection regulations opportunity Rising product regulation is seen as a result of societal demands on business organizations.
This external factor creates opportunities for Amazon. Also, the company has opportunities to grow, based on the external factor of easing import and export regulations.The basic PEST analysis includes four factors: Political factors are basically how the government intervenes in the economy.
Specifically, political factors have areas including tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability.
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Economic Factors Important to heartoftexashop.com Inc. Amazon’s performance depends on the situation of the economies where it operates its online retail business. The effects of economic trends and changes on the remote or macro-environment are considered in this aspect of the PESTEL/PESTLE Analysis model.
Nike Inc. PESTEL/PESTLE Analysis. The PESTEL/PESTLE analysis model is used to determine the most important issues that Starbucks must address in its business strategies.
Political Factors Affecting Starbucks Coffee’s Business. This part of the PESTEL/PESTLE analysis framework identifies the impact of governments on business.
Economic: These factors are determinants of an economy’s performance that directly impacts a company and have resonating long term effects. [For example] a rise in the inflation rate of any economy would affect the way companies’ price their products and services. The ever-dynamic nature of the business environment coupled by political, economic, social, technological, environmental and legal factors (PESTEL) have contributed to a number of implications to business startup and or operation.
Miller () noted that, PESTLE is a strategic framework for understanding external influences on a business.