PESTEL Analysis free essay sample

Selling goods in the global marketing is extremely challenging. Discuss the major political, economic, socio-cultural, technological, legal and ecological challenges that a global marketing manager may have to contend with? The following analysis known as the PESTEL analysis is a framework used to scan the organization’s external macro environment which refers to forces that are part of the larger society and affect the micro environment. Selling and marketing goods in the global market intensifies these issues and creates a larger challenge for marketing managers. The macro environment is where organisations do not have any control. Political factors Political factors refer to the stability of the political environment and the attitudes of political parties or movements. How and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. From the list it is clear that political factors often have an impact on organisations and how they do business. Organisations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factors Economic factors have a significant impact on how an organisation does business and also how profitable they are. This refers to the purchasing power of potential customers and the ways in which people spend their money. These factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses make decisions. For example, interest rates affect a firms cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. These vary from one country to another, thus affecting the global market as marketing managers have to look at the market as a whole but cater to the different needs from each country. Socio-cultural factors These represent the culture of the society that an organisation operates in. These include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a companys products and how that company operates. For example, an ageing population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). These factors are important as they have a direct effect on how marketers understand customers and what drives them. Technological factors The technological environment is perhaps one of the fastest changing factors in the macro environment. Technological factors refer to the rate of new inventions and development, changes in information and mobile technology, changes in internet and e-commerce or even mobile commerce. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation. Ecological factors Also known as environmental factors and they include weather, pollution, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder. Also, pollution can go as far as negatively affecting a company’s reputation if they are known for damaging the environment. Furthermore, growing awareness to climate change is affecting how companies operate and the products they offer, it is both creating new markets and diminishing or destroying existing ones. More and more consumers are demanding that the products they buy are sourced ethically and if possible from a sustainable source. Legal factors Legal factors are those which have become law and regulations. Include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. It is clear that companies need to know what is and what is not legal in order to trade successfully. If an organisation trades globally this becomes a very tricky area to get right as each country has its own set of rules and regulations. Conclusion When dealing with the marketing environment it is important for a company to become proactive. By doing so, they can create the kind of environment that they will prosper in and can become more efficient by marketing in areas with the greatest customer potential. It is important to place equal emphasis on both the macro and micro environment and to react accordingly to changes within them. As seen from the above analysis selling goods in the global market is difficult as different countries have policies, regulations and laws that differentiate from each other. It is therefore important for a marketing manager to be able to come up with solutions that cater for each different market. A PESTEL analysis should therefore feed into a SWOT analysis as it helps to determine the threats and opportunities represented by macro-environment forces that the organisation usually cannot control. When looking at the global market, it is best to perform the analysis on a country by country basis.