The Environment

The environment of a business consists of different layers. The biggest one is the macro-environment. The next, smaller one is the industry. After the industry follow the competitive markets and after that the organization ifself.

The PESTEL framework provides a comprehensive list of influences on the possible success or failure of particular strategies. It has six main influences:

  • political factors
  • economic factors
  • socio-cultural factors
  • technological factors
  • environmental factors
  • legal factors

When using the PESTEL framework, first one should apply the selectivity, which means to identify specific factors which impact on the industry. After that, one should identify which are not only currently important, but also consider which will become more important. Then one should use the data to support the points and analyse trends using up-to-date info. As a final step, opportunities and threats can be identified.

Scenarios are detailed and plausible views of how the environment of an organisation might develop in the future based on key drives of change. They are build on the PESTEL framework, do not offer a single forecast and develop a few alternative scenarios to analyse future strategic options.