ACCA P5 APM Tips of the Day
PESTLE is the highest-level layer. This consists of broad environmental factors that impact to a greater or lesser extent on almost all organizations. This PESTEL analysis provides the broad ‘data’ from which to identify key drivers of change. These key drivers can be used to construct scenarios of alternative possible futures.
How to Handle the Question is again we see our opportunities and threats.
ALSO, CHECK THESE POSTS;
If Government’s policies or increase in Government spending / supporting to business is an opportunity.
Is economy in growth/recession? (if growth then opportunity)
Factors which will influence the economy are:
- Interest, inflation and exchange rates
- Taxation and government subsidies
- Level of unemployment
- Balance of trade
The social environment (affects the workforce and consumers)
- influences include changing cultures and demographics.
- Changing values and lifestyles.
- Changing values and beliefs.
- Changing patterns of work and leisure.
- Demographic changes.
- Changing the mix in the ethnic and religious background of the population.
The technological influences
If Technology impact of the production and company technology is better then it is
- Changes in production techniques.
- The type of products that are made and sold.
- How services are provided.
- How we identify markets.
Stands specifically for ‘green’ environmental issues, such as pollution, waste and climate change. Environmental regulations can impose additional costs, for example with pollution controls, but they can also be a source of opportunity, for example, the
new businesses that emerged around mobile phone recycling.
How an organization does business:
- Law of contract, law on unfair selling practices, health and safety legislation.
- How an organization treats its employees, employment laws.
- How an organization gives information about its performance.
- Legislation on competitive behavior.
- Environmental legislation.
Main Tips are if the question asks you any Model of PESTEL, Porter’s five forces and Product lifecycle you have to Handle it based on external analysis using them by:
- Opportunities to be exploited, e.g. rising incomes within a particular group of customers.
- Threats to be reduced, e.g. the possible entry into an industry of a multi-national corporation.
Note that opportunities will potentially make it easier for the organisation to meet its objectives, just as threats will potentially make it harder.
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