So PESTEL.
What is it and why didn’t they name it Pestlé, like Nestlé?
PESTEL is an acronym used to describe the key components in the macro environment that
an organization must consider when entering a new or foreign market.
So a macro environment is all of the exterior influences that an organization must endure
broken up into six categories.
For example, pretend this notebook represents an organization.
Everything that happens on the inside represents a micro environment.
Everything that happens on the outside represents a macro environment.
So if I were to, I don’t know, punch this across the room, the exterior influence would
be my fist.
Ow! Why would you?
Are you okay?
Does your face hurt?
Does it hurt?
I’m gonna sue you.
Who are you gonna sue?
You are 2017 me.
I am future you.
Hello, are you even listening?
What are we talking about?
Get out.
Anyways, like I said, PESTEL represents the six macro environmental influences:
political, economic, social, technological, environmental, and lastly, legal.
Political influences are how the government influence policy and economic landscapes.
This includes what the government as a whole does or does not support, corruption,
current stances with other countries, and apparently now, presidential tweets.
Yup.
Economic influences are how the economy influences the flow of money in the market:
exchange rates, inflation rates, unemployment rates, interest rates,
basically anything that influences the purchasing power of the dollar.
Technological influences are how innovative the world around us is and will be:
how much research and development is being done, how much funding is going into new technology,
and where is the world’s data going?
Environmental influences include the ecological state of the world:
pollution, climate change, CO2 emissions, Bambi losing his house, all of those things.
Lastly, legal influences include, you guessed it, the law:
consumer protection laws, unemployment laws, discriminatory laws, health and safety laws,
copyright laws, anything that restricts what an organization can do.
That was a lot of information. I know.
Let’s put this into perspective.
Let’s say you have a company that wants to sell water sprinklers.
The water sprinkler of all water sprinklers.
We’re gonna use your water sprinkler company to show the six macro environmental influences.
Political: The president tweets.
He says he hates green grass.
Economic: Unemployment rate is rising, inflation is through the roof, interest is the highest it’s ever been.
I don’t really know if a lot of people care for green grass right now.
Technological: That dude Elon Musk, he just came out with a genetically modified strain of grass
that waters itself by crying because the president said he hates green grass.
Environmental: The world is running out of clean water.
California’s just about as dry as a Saltine cracker bursting into flames every single second.
Do you really need to be watering your grass right now?
Legal: Now I won’t tell anybody, but I hear your water sprinkler tends to burst into flames
after about three hours of use, and the more I think about it, it really doesn’t make sense,
but we're just gonna – we're just gonna roll with it.
Now I don’t know about you, but a flaming water sprinkler might break some consumer protection laws.
Based on the PESTEL model, you shouldn’t make these water sprinklers.
Just not the right time.
Can I get a sprinkler?
Why are you still here?
This PESTEL thing sounded interesting.
Right. You’ve got your political, your technological,. It’s cool stuff right?
Yeah!
And you’ve got your president with his tweets and the grass and it’s crying because he’s
sad because he hates green grass.
No, but really, can I get a sprinkler?
Oh I’m not selling sprinklers.
You said you were selling sprinklers.
No, that was a hypothetical for the macro environmental model example.
Yeah it’s not real it was just a hypothetical situation where –
The what?
It was – don’t be this kid.