PESTLE model free essay sample

Introduction The purpose of this essay is to discuss how PESTLE assists a technology industry to expand into a new market effectively. The main argument of this essay would be PESTLE model will be able to assists a technology industry to expand into a new market effectively because of this model will analyse external environment in six fields and detect the trend of market. Therefore, company or organization is able to make suitable strategy to minimize or avoid the influence of external-environment. This essay will concern on the factors of PESTLE model and illustrate the usage of each factor in environment analysis. Consequently, industry could be able to expand into a new market effectively through the PESTLE model. The following parts of essay will be using Syngenta as an example to demonstrate how PESTLE model assist a technology industry to expand into a new market effectively. It will discuss how company affect by political factors, economic factors, social factors and technological factors. As the limitation of essay requirement, the legal and environmental factors would not describe in this paper. However, legal and environmental factors are significant in PESTLE model. PESTLE model The simple acronym ‘PESTLE’ stands for political, economic, social, technological, legal and environmental factors. PESTLE model is a useful tool to scanning the general environment of business. (Anthony, 2008, pp.51). There is a logical and comprehensive diagram of environment was assembled by PESTLE model. (Brooks Weatherston, 2000, pp.7) The basic function of PESTLE model would be that it provides information and data which allow the company or organisation to predict future situations and circumstances. (Yuksel, 2012). Therefore, companies are able to minimize the influence of environment by PESTLE model. In 1967, Aguilar discussed the  environmental factors would affect business operation. The acronym ‘ETPS’ was given by him and it was used to describe economic, technical, political, and social factors. In the early 1970’s, the environmental factor was added in this approach by Arnold Brown. In the 1980s, the model involved in legal factor.(Ri chardson, 2006). A decade later of Brown’s ‘STEPE’ model, there are several economist attempt to define the environmental factors in different way, thus resulting in PEST, PESTLE, STEP and STEEPLE model. As one of the world’s largest agribusiness, Syngenta focus on delivering sustainable agriculture through innovation and technology. Political Factors Political factors of PESTLE model deal with the effects by local and national administrations and by international organisation such as the World Trade Organization. (Adrian Alison, 2008, pp.106). It is includes items such as government regulation, taxation policy and government stability. (Anthony, 2008, pp.52). In particular, all businesses should be complying with the national law. The impact of any legislation should be considered before expand the business. It is important organization operate in a stable political system. According to the journal given by Bordo and Rousseau (2006), they claimed that there was an obvious relationship between political instability and the business returns. Instable political system would be delay or reduce investment and slow down entrepreneurial activity. So it means a successful company will avoid instable political system. Political factors will also impact the operation cost of organization. Because of there are various taxes which firms need to pay, so the operation cost of company would be increase by government policy. Syngenta focus on global agriculture industry which is important to all governments. The World food Summit defines food security as all people have access to sufficient and safe food to meet their needs all the time. (World Health organization, 1996). In order to increase food security, Syngenta concern on improving technologies which are safe and reliable. Most of countries focus on developing new energy; Syngenta invests in biofuel technology which is helping countries to provide alternatives energy. In additional, the greenhouse gas emissions would be reduced by using the biofuels. The new markets which Syngenta choose to expand are under stable political system  such as China and Australia. Syngenta obey different national laws in different places and attempt to assist governme nt achieve national goal. Consequently, Syngenta acquire government’s support to expand into a new market. Economic Factors The economic factors of PESTLE model relate to changes of economy, there are several key economic indicators such as interest rates, rate of unemployment, exchange rates and gross domestic product (GDP). (Anthony, 2008, pp.52) The ability of business to generate profits is affected by these economic indicators so that it need close monitoring. Adrian and Alison (2008) mentioned that there are some other important economic factors relate to supply of raw material and labour. It means the shortage of raw material and labour result in the increasing of price or salaries which will increase the operation cost of company. There are a number of economic factors affects the operation of Syngenta such as the increasing price of oil and the increasing demand for crops. As a result of increasing demand of crops, farmers need to use the land much more effectively. In order to fulfil the requirement of the farmer, Syngenta improve the quality of product. It means crops are ensured as health and free from disease so that the production of crop would be increase. According to announcement of Syngenta, the new crop protection technologies increase 60% of production. Social Factors Social factors of PESTLE model include the changing of social within the environment and often related to changes in society’s behaviour, tastes and lifestyle. (Anthony, 2008, pp.56) There are two different types of social trends. (Adrian Alison, 2008, pp.108) Some social trends will affect few people or last in short time period, others are widespread in most of countries and last in several decades. Firms need close monitor the change of social trends. A successful company or organization would be able to make suitable strategy to fulfil social trends, thus to maximize the profit. There are a range of social factors would affect the expanding of Syngenta. As the result of global population increasing, the demand of water increase dramatically. And agriculture is one the biggest user of water in a nation at same time. Therefore, Syngenta launch a new product which is more  water-efficient and still high yielding. The feature of this new plant not only fulfil social trend and also help Syngenta expand into a new market effectively. Technological Factors Firms are facing increasing competitive pressures in today’s global economy. There is a common strategy which can be used to assist firms to remain competitiveness and this strategy called technologies. (Cheng, Chang Huang, 2011) Technological factors of PESTLE model include the rate of innovation. (Anthony, 2008, pp.58) Technological advances include the internet, the use of software, genetic engineering and nano technology. (Anthony, 2008, pp.58) It means technology remain competitiveness so that assist company expand into new market. In the other hand, technological factors also help the company to meet sustainability. Sustainability is now a high priority and businesses are keen to reduce waste and be more energy-efficient. Syngenta always focus on increase the product output and develop sustainable agriculture product. For instance, there is a partnership among Syngenta, government and environmental organisation and they concentrate on reduce soil erosion and improve biodiversity. Syngenta also provide biofuels support car manufacturer in developing low emission vehicles. With these technological advantages, Syngenta are able to expand into a new market successfully. Syngenta is a leading supporter of food, feed and biofuel production. Syngenta expand the business into new market effectively by using the PESTLE model to make suitable strategy. Conclusion PESTLE model is a tool often used to scanning the general environment and assist manager to make suitable strategy to adapt external-environment. Therefore, companies or organizations are able to adjust strategy to expand into new market by PESTLE model. In PESTLE model, it encompasses six factors which are deeply impact the operation of company. Without the analysis by PESTLE model, industry is not able to expand into a new market effectively. Furthermore, PESTLE model is a simple framework for making expansive strategy. Each factors of PESTLE model could work independently or work together, so it will be a systematic and effective strategy making tools when consider six factors as whole. Even though PESTLE model have some limitations such as it is not adopt quantitative approach to measure  environment, but PESTLE model is still a useful tool to analyse the external-environment of business. In conclusion, PESTLE model can help technology industry such as Syngenta to expand to a new market effectively.