Driving Forces and PESTEL Analysis
A big beverage company doesn't lose sleep only over rivals. It tracks the sugar-reduction trend, a sweetened-drinks tax, and energy prices. These are forces from 'outside the industry' that can rewrite the rules. In this lesson we'll meet the PESTEL model for the macro environment, and the 'driving
PESTEL is a checklist of the six big force-types that affect any industry. 'Driving forces' means picking the ones that truly matter, sizing up their impact, and adapting the strategy.
- PESTEL model
- A framework for the macro environment by six factor groups: Political, Economic, Social, Technological, Environmental and Legal.
- driving forces
- The forces with the biggest influence on an industry's direction in the coming years, identified and assessed in a three-step process.
- complementary product
- A product consumed together with another (like fuel for a car); a change in its price affects demand for the other.
- globalization
- Greater economic connectivity between countries, widening an industry's macro environment beyond one country's borders.
- macro environment
- The external, economy-wide environment affecting all industries; the one PESTEL sets out to map.
- regulation
- Rules the state sets that affect an industry (taxes, standards, licensing); falls under PESTEL's P and L.
- environmental scanning
- Systematically tracking external forces to spot opportunities and threats early; PESTEL is a key tool for it.
