Macro-environment PESTLE analysis

   Before having the lecture of this week, I knew that all organizations need to face the changes of external environment like customer buying style, economic condition and new technologies. However, I did not know how to summarize all the influences into specific terms. After the lecture of this week, I found PESTLE analysis is a technique for identifying the changing macro-environment which will affect all organizations. There are six dimensions of macro-environment, namely political, economic, socio-cultural, technological, environmental and legal. The table on the left provides some factors with related to respective dimensions. Through identifying these factors, companies can help a clear perspective about general influences leading to an easier decision for making  future strategies.

Here is a video defining what macro-environment is: 

   Using H&M as an example, the macro-environment can be identified easily.

Firstly, the political factors of H&M are the areas like business legislation, tax policy, trade restrictions of different countries. Secondly, industrial structure, income distribution, purchasing power, economic growth  can affect how H&M operates and makes decisions. Thirdly, recognizing the needs and wants of different customers and following the fashion trends are the socio-cultural factors which H&M needed to consider.

Fourthly, with related to legal, H&M must obey the National Laws and International and Business Law like H&M needs to avoid using child labor in their production line. Fifthly, innovation, research and development, new products and processes are treated as technological factors. Also, maintaining 10-15% expansion growth is an technique to maintain its expansion permanently. Finally, environmental factors are really effectively affect the decision making of H&M. For example, climate change can lead to change in H&M's production.

   However, I am not really sure that whether PESTLE can be accuracy and useful for an organization. I think that the external factors considered during PESTLE analysis are dynamic and they can change at a fast rate. It will be very tricky to predict how these factors may affect in the future. The uncertainty effects of the factors may also a problem because same situation may not lead to the same effects. Besides, I don't really believe that just simply listing the environmental factors can be a strong reference for making future strategies and I cannot identify the degree of influence of different factors. If I can find the accurate figures and information to prove and support my PESTLE analysis, the figures will be quickly out of data. The cost of maintaining the newest information of macro-environment will be costly. I strongly believe that PESTLE analysis is not an useful tool when I do strategy planning.

   I personally suggest that if there are accuracy of the data collected, timely updates to accommodate changes, PESTLE analysis can be a viable technique. I also emphasize that during the strategy planning, macro-environment is one of the factors we need to consider. Internal environment and micro-environment need to be investigate simultaneously in order to produce an better future plan.