PESTLE-Macro Environmental Analysis for Handicraft

Industry:
The PESTLE Analysis is a tool that is used to identify and analyze the key drivers of change in
the strategic or business environment. The abbreviation stands for Political, Economic, Social,
Technological, Legal, and Environmental factors. The tool allows the assessing of the current
environment and potential changes. The idea is, if the project is better placed than its
competitors, it would be able to respond to changes more effectively. The PESTLE Analysis tool
can be used for business planning, strategic planning, marketing planning, product development,
and organizational planning. The PESTLE tool provides its users with factors that need to be
well researched and brainstormed. PESTLE Analysis is used to examine the current and future
state of the industry an organization belongs to. This helps in the strategic planning and gaining
the competitive edge over the other firms in that industry. This analysis can not only be used for
an organization as a whole but various departments can also be inspected under this framework.
For example, it makes more sense for a company with diversified product range to analyze its
departments separately than the organization as a whole.
Lets look at each of these macro-environmental factors in turn.

In the following the components of pestle analysis are explained which are
needed to consider by handicraft industry:
Political Factors affects the organizations in terms of government regulations and legal issues
and define both formal and informal rules under which the firm must operate. Examples are:

Political stability
Tax policy
Employment and labor law
Environmental regulations
Trade restrictions
Tariffs etc

Economic factors affect the business operations and decision making of the organization. For
example the predicted recession is preventing the organizations from increasing the workforce .
Other examples are:

Economic growth
Interest rates
Inflation rate

Social factors refer to the cultural and demographic aspects of the environment. For example
increase in the health consciousness may affect the demand of the companys product. Other
factor includes:

Age distribution
Population growth rate
Emphasis on safety
Career attitudes

Technological factors affect the cost and quality of the outputs. These also determine the
barriers to entry and minimum efficient production level. Factors include:

Automation
Technology incentives
Rate of technological change
R&D activity

Legal factors influence the companys operation, its costs, and the demand for its products.
Factors include:

Consumer law
Antitrust law
Employment law
Discrimination law
Health and safety law

Environmental factors refer to ecological and environmental aspects such as weather, climate,
and climate change. Climate change is a hot topic these days and organizations are restructuring
their operations thus giving space to innovation and concept of Green Business.

The PESTLE Factors

We start with the Political forces. First of all, political factors refer to the stability of the
political environment and the attitudes of political parties or movements. This may manifest in
government influence on tax policies, or government involvement in trading agreements.
Political factors are inevitably entwined with Legal factors such as national employment laws,

international trade regulations and restrictions, monopolies and mergers rules, and consumer
protection. The difference between Political and Legal factors is that Political refers to attitudes
and approaches, whereas Legal factors are those which have become law and regulations. Legal
needs to be complied with whereas Political may represent influences, restrictions or
opportunities, but they are not mandatory.
Economic factors represent the wider economy so may include economic growth rates, levels
of employment and unemployment, costs of raw materials such as energy, petrol and steel,
interest rates and monetary policies, exchange rates and inflation rates. These may also vary from
one country to another.
Socio-cultural factors represent the culture of the society that an organization operates within.
They may include demographics, age distribution, population growth rates, level of education,
distribution of wealth and social classes, living conditions and lifestyle.
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, and government spending on research. There is often a tendency to focus
Technological developments on digital
and internet-related areas, but it should also include materials development and new methods
of manufacture, distribution and logistics.
Environmental impacts can include issues such as limited natural resources, waste disposal and
recycling procedures.

Additional Considerations

A newer force which is gaining in importance is ethics. These can be defined by the set of
moral principles and values that govern the actions and decisions of an individual or group.
Ethics and morals serve as guidelines on how to act rightly and justly when individuals are faced
with moral dilemmas. This force could include corporate social responsibility, fair trade,
affiliation between corporations and charities. A particular problem may exist with how ethical
factors relates to legal forces as they may be at different stages in development. Something may
be ethical but not protected by law, whereas other activities may not be ethical, but are legal.