PESTEL analysis
template
Political
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? ? Economic
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? ? Social
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Technological
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? ? Environmental
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? ? Legal
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A PESTEL analysis focuses on the external environments in which a business operates. You should be able to describe the potential impact(s) that each identified factor may have on the business now and in the future. Analysis should focus on the factors that are most likely to change and the factors that are likely to have the greatest impact on the business.
• Political – Existing or potential government policies; and ways in which government does, or is likely to, impact on the business.
• Economic – Key economic factors that impact on the business.
• Social – Demographic characteristics, societal norms or trends and applicable attitudes and values.
• Technological – Technological changes, innovations or advancements, and cross industry/market adoption or adaption.
• Environmental – Environmental factors or changes that may impact on the business.
• Legal – Existing legislation that impacts on the business. Potential changes to legislation are considered to be political factors as governments drive changes in legislation through policies.
For the factors listed above, consider which factors are most likely to change and their impacts on the business.
Swot analysis
template
S Strengths
W Weaknesses
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3. 1.
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O Opportunities T Threats
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3. 1.
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Internal perspective – Factors that the business can directly control. They are considered important to its long-term success.
Strengths - Internal features of the business that allow it to operate more effectively than its competitors.
Consider the following:
• What the business does better than its competitors.
• The advantages it has over its competitors.
• What differentiates it from its competitors.
Weaknesses - Internal aspects of the organisation that could be improved.
Consider the following:
• Whether the business has any features that do not meet the industry standard.
• Whether the business can increase performance in any underperforming aspects.
• Any features of the business that cause problems or complaints.
• What its competitors can do better.
External perspective - Factors that the business cannot control.
Opportunities - Factors in the business external environment that it can use to its advantage, such as new or changing trends.
Consider the following:
• Any developments or changes in relevant technologies or markets.
• Any changes in relevant government policy or regulations/legislation.
• Any major local or global events that may have occurred.
• Any potentially new uses of the business’ products and/or services.
Threats - Factors in the business external environment that could adversely affect the business or its strategic intent. Examples include inflation, new legislation or a new competitor in the market.
Consider the following:
• Any obstacles the business might face from external factors.
• What the business’ competitors are doing.
• Any changes in products, services or technology that could threaten the business.
• It is possible for something to be considered as both an opportunity and a threat.
Porter’s Five Forces Analysis
template
Porter’s Five Forces analysis considers the external environment in which a business operates to determine the intensity of competition that exists within an industry. The higher the overall intensity rating of the various forces, the higher the intensity of competition. The level and source of intensity should have a direct impact on a business’s strategy.
• Threat of new entrants – How easy is it for new competitors to enter the industry? Competitors may come from another market (eg overseas) or another industry. Assess the different barriers to entry.
• Threat of substitute products or services – Can other products/services be used in place of the products/services the business provides? How similar are the other products in terms of cost, quality and functionality?
• Bargaining power of suppliers – In negotiations, who has the greatest influence on the relationship? Who is more dependent on the other? Who has the greater market presence, and are their supplies unique?
• Bargaining power of buyers – In negotiations, who has the greater influence on the relationship? Who is more dependent on the other? Who has the greater market presence?
• Rivalry amongst existing competitors – How many businesses operate in the market? How fragmented is the market? What is the key basis for competition? How are industry growth levels? What stage of the growth lifecycle is industry currently experiencing? What are the barriers to exiting the market?
Value chain analysis
template
Primary activities Margin
Inbound logistics
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? ? Operations
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? ? Outbound logistics
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? ? Marketing and sales
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? ? After-sales services
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Support activities Administrative infrastructure
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Human resources management
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Technology development
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Procurement
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Task 2.
1. Fill in the template by describing 10 different risks in the case study. Include a range of both financial and non-financial risks in your answer. For each risk you need to answer the following questions:
o What could be the source or underlying cause of the risk?
o Why is this a risk?
o What would be the consequences of failing to address the risk?
o How can the risk be managed?
2. Update the strategic analysis you completed in Topic 3.1
3. Open your strategic analysis documents.
4. Compare the analysis documents to the risks you identified.
o Are there any risks you didn’t initially include in your strategic analysis?
o Do you have any new insights that may impact on your strategic analysis?
5. Amend your strategic analysis by adding in any relevant information from your risk identification. Include justification for these changes.
Risk identification
template
Risk Name and description of the risk Source or underlying cause of the risk Explanation of
why this is a risk Potential consequence(s)
of failing to address the risk Can the risk be managed?
If yes, how?
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TASK 3
Analyse the financial ratios.
1. For each ratio, complete the analysis column. Compare each ratio over time and to the benchmark, referring to the financial statements and the company information.
2. Write a brief analysis for each ratio which includes the following:
o How the company compares to benchmark ratios.
o The reason why a ratio might differ from a benchmark.
o Whether the ratio is considered reasonable.
o Ratio trends over time.
3. Update the strategic analysis and risk identification you completed
4. Open the strategic analysis documents and the risk identification document.
o Compare these documents to your ratio analysis. Does this provide any new insights that may impact your strategic analysis and identified risks?
5. Amend your strategic analysis and risk identification documents by adding any relevant information from your ratio interpretations. Include justifications for these changes.
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