Strategy
. Environment/industry analysis

Why is Environmental and Industry Analysis so important? Why do we begin with this?

The environment – the space in which you operate – is the REALITY.

The correct formulation of strategy must be based on reality.

Environmental Analysis – Tools
There are a number of tools that one can use to understand the environment.
Tools include:
PESTEL, Scenarios,
Five Forces, Industry Life Cycle,
Segments & Groupings Critical Success Factors

The PESTEL framework (1)
The PESTEL framework categorises environmental influences into six main types: political, economic, social, technological, environmental legal
Thus PESTEL provides a comprehensive list of influences on the possible success or failure of particular strategies.

• Political Factors: For example, Government policies, taxation changes, foreign trade regulations,political risk in foreign markets, changes in trade blocks (EU).
• Economic Factors: For example, business cycles,interest rates, personal disposable income,exchange rates, unemployment rates, GDP trends.
• Socio-cultural Factors: For example, population changes, income distribution, lifestyle changes,consumerism, changes in culture and fashion.
Technological Factors: For example, new discoveries and technology developments, ICT innovations, rates of obsolescence, increased spending on R&D.
• Environmental (‘Green’) Factors: For example,environmental protection regulations, energy consumption, global warming, waste disposal and re-cycling. • Legal Factors: For example, competition laws, health and safety laws, employment laws, licensing laws, IPR laws.

Using the PESTEL framework
• Apply selectively –identify specific factors which impact on the industry, market and organisation in question.
• Identify factors which are important currently but also consider which will