Final Answer:
PESTEL (also known as STEEP or PEST) is a strategic management tool used to analyze and evaluate the external macro-environmental factors that can impact an organization. It stands for Political, Economic, Social, Technological, Environmental, and Legal factors. This framework helps businesses assess the various influences that may affect their operations and decision-making processes.
Step-by-step explanation:
PESTEL analysis is a comprehensive framework that considers six key categories of external factors affecting an organization.
This involves examining the influence of government policies, political stability, and regulatory frameworks on business operations.
Economic conditions such as inflation rates, exchange rates, and economic growth can significantly impact a company's performance.
Social factors include cultural trends, demographics, and societal attitudes that may affect consumer behavior and preferences.
Assessing technological trends and innovations helps organizations stay competitive and adapt to changes in the industry.
Environmental considerations focus on sustainability, climate change, and the impact of business activities on the environment.
This category involves analyzing the legal landscape, including regulations, compliance requirements, and potential legal risks.
By systematically evaluating these factors, businesses can gain insights into the external environment and make informed decisions. PESTEL analysis provides a structured approach for organizations to anticipate challenges, identify opportunities, and formulate strategies that align with the prevailing macro-environmental conditions. It is a valuable tool for strategic planning and risk management, helping businesses navigate the complexities of the external landscape.