PESTLE Analysis PDF

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Intro to Fashion Merchandising 04/02/20 LO: -

Planning & the Macro Environment PESTLE analysis Competition analysis Product trend analysis Customer trend analysis

SWOT analysis to PESTLE analysis A PESTLE analysis is used within industry and more academic pieces of work as it forms a much more comprehensive analysis of an area that of a traditional SWOT analysis. PESTLE - Importance of each factor may vary within different industries, but every company must use PESTLE to develop their strategies. It is a management method that examines the effect that events or influences from the outside environment may have on the performance of a company or organisation. Political - Government influences on the economy e.g. the government may impose a new tax or duty due to which entire revenue generating structures of organisations might change. Can include tax policies, fiscal policy, trade tariffs etc. Examples – Brexit, Investment in UK manufacturing, Demand for investment from abroad, Increase in business rates, Taxation, Increase in trade tariff, Labour government. Economic – These factors determine an economy’s performance that directly affects a company and have resonating long term effects, e.g. a rise in the inflation rate of any economy would affect the way companies price their products and services. Examples – Inflation rate, Interest rates, Foreign exchange rates, Economic growth patterns, Business trends, Unemployment disposable income, Energy availability and cost. Social – These factors scrutinise the social environment and gauge determinants like cultural trends, demographics, and population analytics. An example is buying trends in the Western world where the demand is high during holiday season. Examples – Income distribution, Social mobility, Lifestyle changes, Attitudes to work and leisure, Consumerism, Levels of education. Technological – These factors have a more important effect on the success of a business than they did 150 years ago. From speed of production and transfer of information, the fashion industry has benefitted immensely. Examples – Governments spending on research, Industry focus on technology, New discoveries and developments, Speed of technology transfer, Rates of obsolescence. Legal – These are external factors which focus on the influence that the law has on business operation. The distinction between legal factors and political factors is that political is concerned with society and the economy to create growth whereas legal is concerned with government intervention in society.

Examples – Consumer law, Fraud law, Import/export law, Legalities of doing things, Discrimination law, Copyright law, Health & safety law, Employment law. Environmental – These include factors that influence or are determined by the surrounding environment. In the fashion industry, locations of suppliers and raw materials are crucial to understand as they dictate who you use for manufacturing and the supply of materials. Examples – Climate, Weather, Geographical location, Global changes in climate, Environmental offsets. Ambiguity With extensive information, it can get confusing to decide which factor is the most critical and needs to be dealt with first. Priority becomes a problem. Companies can be helpless if the economy is unstable and there is political unrest. The company has no control over macro factors, but these factors will influence its operations. Both internal and external factors are equally important for an organisation to have a competitive advantage. A PEST analysis should be combined with a SWOT analysis for more robust strategic planning.

Stuart Porters Five Forces Analysis The Company Plan - Store openings/closings – like for like comparisons – affect the budgets and forecasting - Channel strategy – bricks and mortar – online – print – omni channel (consistency across channels) - Seasonal marketing plans – advertising expenditure (plans to drive traffic to stores/sites) – new product categories – new trading platforms – consumer initiatives - Financial management – cash flow – sales growth and decline – stock growth and decline – profit growth and decline The Ansoff Model (Igor Ansoff, 1960) Matrix showing how to navigate around the market within different categories, e.g. new products in existing markets, new products in new markets....