Any business decision depends on the factors in the environment in which the business thrives. The business environment is broadly classified into internal and external environment. While the former involves factors within the business over which it has a direct influence the latter are the factors outside the business which cannot be directly influenced.
PESTLE is a popular framework used in business strategy to analyse the external environmental influences on the business. An acronym PESTLE refers to political, economic, social, technological, legal and environmental influences on the business. This model though can be applied to most scenarios, is popularly employed when a business plans to move into a foreign market and when expansion decisions need to be taken.
Political factors refer to the level of involvement of a government in the day to day decisions of the business. Some aspects of the political environment include the ideology of the government, the level of stability, decision making process and influence on policy making. The economic factors are metrics that determine the economic health of the country. A few examples are GDP, Economic policy, budget, Fiscal policy,Export and import policy etc.
Technological environment includes influence of latest technologies and those of obsolete ones. Social environment looks at how demographics, religion, , customs or values influence a business. Legal looks at the impact of laws on the operations of the business and the implications they may have in the long run. Environmental factors- an aspect which has come into vogue recently focuses on the impact of environmental legislation, sustainability practices and pollution control on the business.