PESTLE Analysis | What is PESTLE analysis? - YouTube

Pestle analysis is a strategic management tool used to assess the external

environment affecting a business it then enables the business to create a

strategy to limit these impacts this video explains all six pestle factors

in common areas within those that businesses need to consider each factor

has a link to Amazon and what area is this massively successful business needs

to consider

first of all what is pestle pestle is an acronym that stands for political

economic social technological legal and environmental it allows a business to

assess the external environment and once certain factors have been identified the

business can then put in place a strategy to limit any negative impacts

to the business these factors can link closely to the opportunities in a threat

section of a SWOT analysis as whatever has been identified in a pestle analysis

could be seen as either an opportunity or threat to the business for more

information on SWOT analysis see our video on SWOT which again links to

Amazon now we know what pestle is let's have a look at each pestle factor in

detail and the most common things that businesses need to be aware of the first

of the external influences that can impact a business is political despite

political decisions being outside of the business's control governments around

the world can make decisions that have a direct impact on the operations of the

business common political factors include regulating competition taxation

corruption and business policies otherwise known as red tape these

political decisions and influences can have wide-ranging consequences for a

business despite the business having little control over them one current

threat to Amazon is that governments are becoming increasingly concerned

that they monopolized too much of the market this links directly to regulating

competition in the USA forty-nine percent of online shopping in 2018 was

done through Amazon such domination may lead to political decisions being made

to block further expansion Amazon will identify this political influence

and put a strategy in place to limit its impact the second factor is economic

what areas of the economy will have an impact on business practices one of them

could be interest rates unemployment low unemployment in

country that the businesses operating in is an indicator of a healthy economy and

as more people are in employment it should result in more spending even

higher potential profits for Amazon and therefore their strategy may be to

invest more in expansion during these prosperous times another one is

inflation and finally recession if recession hits this will hit Amazon

directly and will mean they may have to change their direction in terms of their

pricing strategy or items that they sell as consumers will have less disposable

income to spend on non essentials the business may need to strategize by

reducing non-essential costs in the business by identifying such economic

factors the business has more chance of success in future the next factors are

social factors that impact the business these can be things like the demographic

of the population the makeup of the population will affect things such as

disposable income per person and buying behavior if consumers have common traits

business can target these much more easily pressure groups consumer trends

this is something that Amazon are particularly interested in it is

increasingly popular in developed countries to shop online and the social

change in shopping behavior is greatly impacted the rise of Amazon however

continued changes in shopping trends means that Amazon must identify these

and again what a strategy in place to maximise their success for example

they're smart speaker Alexa is poised to be an opportunity for Amazon as people

are starting to shop via voice making the shopping experience more

frictionless and simple for the consumers this in turn will have a

positive impact on Amazon's finances and the final thing that could impact the

business is the health of the population the T in pestle

stands for technology technology is fast moving and has changed drastically over

the years Amazon will assess the technological environment and strategize

over how technological changes will impact the future of the business

areas such as artificial intelligence many of us think of humanized robots

like Sophia when it comes to AI however the future of AI and its impacts

on Amazon may just be improvements in algorithms that can highly target users

by using machine learning to recommend products they will like and in turn

purchase Amazon will need to keep on top of such improvements in AI and

therefore they may strategize to employ the best people in the world to improve

their machine learning capabilities another area they could investigate is

cyber crime big data and finally robotics robotics will have a major

impact on the future efficiency of the business if Amazon manage to keep on

top of improvements in robotics that could mean better customer service

ie drone deliveries and their Scout delivery service Amazon will want to

continue to improve their delivery efficiency and the future of Robotics

could do this for them these are just a few technological impacts and as these

change so rapidly so will Amazon Strategy L stands for legal legal links

very closely to political however things that are political are not always put

into law therefore the legal part of PESTEL tends to focus on specific laws

for example employment law minimum wage laws the minimum wage is a legal

requirement amazon must abide by when operating in the UK this is an external

factor as they have no control over it and any future change to this rate will

directly impact their operating costs any Rises they deemed to be too

excessive may mean they decide to strategically move outside of the UK to

somewhere where labor costs are substantially lower and in turn save

themselves money on labour costs health and safety again any changes in this law

will need to be adhered to by Amazon and may impact the way the business operates

EU laws also impact Amazon and when the business is operating in the EU they

must abide by these laws all these laws need to be followed in differing

countries and strategies over changes to these laws are important to

of Amazon the final of the festival factors is environmental common

environmental factors include a move towards more sustainable business

operations Amazon have been criticized in the past for their lack of

sustainable packaging with images popping up online of small items being

delivered with excessive amounts of packaging with such points being raised

Amazon will look at this and put a strategy in place to avoid

sustainability issues impacting the future of their business further to this

pressures over pollution and supply chain management these are particularly

influential factors at Amazon as their whole operation is based around

logistics Amazon will assess the future of transportation and can plan to reduce

their impact on polluting the environment by using new methods in

greener delivery methods a final factor that could impact the business is

ethical sourcing Amazon needs to be wary of where they're sourcing their products

from and how these are being produced overall PESTEL is a useful tool for

identifying which factors are most important to the future success of a

business and then it allows that business to put strategies together the

lessen the impact of factors outside of the business's control the most

important external factors to assess depends on the industry and country the

business is operating in for example environmental factors will have a

greater impact on the automotive industry rather than something such as

hairdressing thank you for listening and I hope this

has helped you understand pestle analysis and how it can be used as a

strategic management tool in the description is a link to a free

worksheet so you can apply your understanding of pestle analysis if you

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