Remote Environment / PESTEL


Let’s discuss each of these environmental factors in greater detail below:

Political Factors

This basically refers to how stable is the government and its policies are in terms of supporting or damaging the business environment. It also refers to the nature and extent of the involvement of government in trade and economy. This is evaluated by the kind of political stability that may have in the overseas business environment, tax policies, labor laws and policies, environmental policies and standards, trade regulations, foreign trade policies, etc. 
It is important for business to comply to these legislative and governmental regulations to keep their business flow smooth.

Economic Factors

There are usually two types of economic factors; including macro-economic and micro-economic factors. They govern the interest rates, inflation, exchange rates, economic growth of the country and region as well as the disposable income available to consumers. 
B2C businesses are dependent on micro-economic factors more because these govern how consumers spend their incomes. On the other hand, macro-economic factors govern the consumer’s demands in any given economy, which are usually managed by government using tools like tax policies and interest rates.

Social Factors

There are various realms that within the social domain that affect the business environment on the whole. These include country’s population, health needs and requirements, age and demographics, income levels, level of consumerism, etc. All these combine to influence the demands specific to products and services. 
This means that different strategies have to be adopted in relation to the level of each of these factors to match with the social trend. 

Technological Factors

The one major change that all industries face in a dramatic manner is the change in technological environment and how it affects each business. This means that change would occur in the way products are produced, distributed and communicated to the target market.

Environmental Factors

With increasing pollution and waste of natural resources every year, these factors have recently come to play a major role in affecting the business environment. Raw materials are getting scarce and thus performing in a moral framework has become increasingly challenging.  

Legal Factors

These are the rules and regulations of the industry as well as the state you are operating your business in that you are obliged to abide by. It is important for these entities to be aware of the legality of jobs that include but not limited to consumers rights, advertising and marketing standards, equal employment opportunities, health and safety requirements, product safety, etc. For businesses that also deal in foreign trading, there is more in the picture with regard to laws of the recipient countries.