PESTEL Analysis: A Strategic Tool for Marketing

The report gives an overview and analysis of the PESTEL framework as a tool of strategic marketing. The report commences with a conceptual overview of the PESTEL framework. The report also puts forward an analysis of the PESTEL framework as a strategic tool in the perspective of Al Muntazah, a supermarket chain of Bahrain. The report also undertakes PESTEL analysis of Australia, the chosen country, where the chosen company wants to make an entry. There are also recommendations provided in support of the market attractiveness of the chosen country that makes it suitable for entry.

Running head: PESTEL ANALYSIS
PESTEL Analysis
Name of the Student:
Name of the University:
Author Note:

1PESTEL ANALYSIS
Executive Summary:
The report gives an overview and analysis of the PESTEL framework as a tool of strategic
marketing. PESTEL is a tool used by the marketers for analyzing and monitoring factors of
external environment that has an influence on the organization. The report commences with a
conceptual overview of the PESTEL framework. The report also puts forward an analysis of the
PESTEL framework as a strategic tool in the perspective of Al Muntazah, a supermarket chain of
Bahrain. The report also undertakes PESTEL analysis of Australia, the chosen country, where
the chosen company wants to make an entry. There are also recommendations provided in
support of the market attractiveness of the chosen country that makes it suitable for entry.

2PESTEL ANALYSIS
Table of Contents
Introduction:....................................................................................................................................3
Conceptual Overview of PESTEL Framework...............................................................................3
PESTEL Framework as a Strategic Tool.........................................................................................5
PESTEL Analysis of the Chosen Country.......................................................................................9
Conclusion and Recommendations:..............................................................................................11
References:....................................................................................................................................12

3PESTEL ANALYSIS
Introduction:
The report gives an insight into PESTEL framework as a strategic tool for marketing.
PESTEL is a tool used by the marketers for monitoring and analysis of the factors of the external
environment that influences an organization. PESTEL represents a mnemonic that when
expanded denotes political, economic, social, technological, legal and environmental. The
framework however provides an overview of environment from different angles while
contemplating on a certain plan/idea. The facet of these techniques remains vital for a particular
industry. In other words, the PESTEL framework is the backbone of the strategic management
that defines the doings of the company along with holding accountability for the goals of the
organization. The report puts forward a conceptual and theoretical perspective of the PESTEL
framework from the purview of the chosen company, Al Muntazah. The report also undertakes a
sound examination of the PESTEL factors that the company needs to consider. There are also
recommendations on the attractiveness of the Australian market that will support the decision of
the chosen organization in making an entry.
Conceptual Overview of PESTEL Framework
The PESTEL is an acronym that represents the political, economic, social, technological,
environmental and legal factors. It is not only a powerful but also a widely used tool for
understanding the strategic risk of a firm. It aids identification of the impacts and the changes
taking place in the external macro environment of the firm (Rothaermel 2015). The external
environment comprises of the variables beyond the firms control but involves analysis for the
realignment of the corporate strategy and shift of the business environment. A firm however
operates as portion of a bigger ecosystem and remains vulnerable to varied exogenous factors

4PESTEL ANALYSIS
that might have an impact on the competitive positioning of the firm. The strategists seek out for
understanding the external factors and thereby undertake evaluation on how the business model
will evolve for adapting to the environment. The influence of the external factors is met via a
preemptive strategy that exploits opportunities in wake of creation of newer competitive
positions.
According to Gupta (2013), variations of PESTEL analysis are PEST that is devoid of the
legal and the environmental component, STEEPLE that focuses on the perspective of corporate
social responsibility through addition of a dimension for ethics and STEEPLED that focuses on
the analysis of the demographic factors. The increase in the awareness of ecological or the
environmental issues encouraged implementation of a newer version of PESTEL framework
which is STEER, an analytical tool that include regulatory factors. PESTEL analysis along with
its variations represents a portion in the evaluation stage of the process of strategic management.
The process begins with deeper investigation of the firm’s environment. A PESTEL analysis
consists of components that could create fundamental value for the firm. The analysis is
conducted for either the whole firm or the business units or any particular product or any newer
partnership or venture. The figure 1 below represents components of the PESTEL analysis, its
usage and strategic tools employed in conjunction during the process of strategic management.
PESTEL Analysis PESTLE: addition of Environmental and Legal factors
PEST: Political, Economic, Social, Technological
factor s
STEEPLE: addition of the ethical dimension
STEEPLED: include demographics
STEER: include regulatory factors
STEER: include Regulatory factors

5PESTEL ANALYSIS
Figure 1: Summary of PESTEL Components, their Application and other Strategic Tools
Source: (Ho 2014)
PESTEL Framework as a Strategic Tool
Political Factors:
These factors represent the way and the degree of government intervention into an
economy. This include, political stability or any kind of instability present in overseas market,
policy of the government policy, tax policy, international trade policy, environmental law, tax
policy, trade restrictions and labor law(Falkner 2017). The political factors does impacts on the
Analysis of PEST Analysis  Analysis of division and business units
 Analysis of the level of cooperation
 Analysis of brands and products
 Analysis of new marketing and ventures
 Analysis of partnership and acquisitions
Complementary Strategic
Tools
Porter’s Five Forces Model: deals with the suppliers,
new entrants, consumer demand, substitute product and
the competitive rivalry
SWOT Analysis: It refer to identifying the internal
strengths and weaknesses of a firm along with
identification of external opportunities and threats

6PESTEL ANALYSIS
operation of an organization. It is therefore necessary for the organization to provide a response
to the anticipated and present legislation and accordingly adjust their marketing policy. Given
this notion, the report undertakes an analysis on how the political factors of Bahrain influences
the operation of Al Muntazah, the well-known supermarket chain within the country
(almeergroup.com 2018). Bahrain follows a constitutional monarchy where the government is
appointed by the country’s monarchial head, the King. Therefore, citizens hardly possess any
right for changing the government. The country is politically unstable due to the flair ups and the
sectarian divisions. Although the political situation impacts the operation of the retailer, it
however adjusted its marketing policy accordingly to ensure a smooth operation and provide
quality food to the people at affordable prices along ensured a steady extension of ten more
branches.
Economic Factors:
These factors majorly influence the way in which an organization performs business and
determination of its profitability. The factors include economic growth, interest rate, inflation
exchange rates and the consumer disposable income. The economic factors are categorized
further into micro and macro economic factors (Chavan and Ahmad 2013). The micro economic
factors represent the manner in which people spend the income while the macro economic
factors represent the demand of the management within a given economy. However, the
government uses the taxation policy, government expenditure and controlled rate of interest as
the key macroeconomic mechanisms.
In this context, the real gross domestic product (GDP) had estimation around BHD 11.91
million in the year 2016 while nominal GDP accounted for close to 12 billion. As a result the

7PESTEL ANALYSIS
GDP deflator stood at 100.752 with estimated per capita GDP at USD 24182.90 and the
purchasing power parity (PPP) based on the per capita GDP had an estimated value of USD
50704.07(Kinninmont 2015). However, in the year, 2016, the revenue of the government was
estimated to be BHD 2.117 Billion while the expenses were close to BHD 4.245 Billion that
brought the net lending of the government in negative to about BHD 2.128 Billion. This
indicated that the government lacked enough financial resources for boosting the growth of the
economy. Besides, the negative current account balance indicated that Bahrain represented a net
borrower. These factors ensured the supermarket chain is targeted towards the lower and middle-
income groups with little expansion.
Social Factors:
These factors, also known as socio cultural factors include areas involving the shared
attitudes and belief of population. The factors involve growth of population, health
consciousness, distribution of age and the career attitudes. These factors holds specific interest
since they directly influence the understanding of the marketers about the customers and the
means that compels them (Castano, Mendez and Galindo 2015). However, in Bahrain, the
wealthy and the educated people live in Muharraq and Manama. Most of the jobs have foreign
staffs and the country experiences an unemployment rate of close to 15 percent. This is because,
Al Muntazah, had its first store in Muharraq and offered quality food products at the most
affordable prices. The store always remained stocked and enabled convenience in shopping for
local community. Besides, Bahrain has a vast Muslim population governed by the tenets and
laws of Islamic calendar. For instance during, the Holy month of Ramadan, there occurs a
decline in the business activity as the Muslims need to adhere to stricter religious norms.

8PESTEL ANALYSIS
Technological Factors:
The change of technological landscape takes place at a quick pace thereby impacting the
manner in which an organization markets its products (Dunning 2013). The technological factor
influences the management and the marketing in three unique manners that include:
 Newer means of producing the goods and the services
 Newer means of distributing the goods and the services
 Newer means of communication with the target market
In this context, Bahrain enabled Al Muntazah, the supermarket chain, in leveraging
varied tools like the mobile technology for streamlining its operations, ensuring the elimination
of the existing bottlenecks and ensuring that the workforce is provided with an effective and
collaborative system of knowledge management.
Environmental Factors
These factors came into prominence in the recent past and hold an importance because of
the scarcity of raw materials, performance in business in an ethical and sustainable fashion,
targets involving carbon footprint declared by the government (Vicente-Molina, Fernández-Sáinz
and Izagirre-Olaizola 2013). This represents some of the issue faced by the marketers. Besides,
an increasing number of consumers demands that the products bought by them are from a
sustainable and ethical source.
At present the environmental issues faced by Bahrain includes controlling the oil spills
and industrial discharge from the large tankers, refineries and the distribution system. The
country also focuses on the carbon footprint target and the performance of ethical and sustainable
business that has a direct impact on the operations of the retailer.

9PESTEL ANALYSIS
Legal Factors
The legal factors include equal opportunities, safety and health, advertising standards,
product labeling, consumer law and rights and the product safety. The companies however need
to know about its whereabouts and the legal means for undertaking successful trade. However,
when an organization undertakes global trade this area represents a tricky area as every country
has its own regulations and norms.
To start a business in Bahrain, Al Muntazah, had to obtain a lease agreement, draft a
memorandum of association, and has it approved from Ministry of Commerce (Jalal-Karim
2013). The retailer also had to obtain approval from Municipality and notarize the association
memorandum. The retailer even had to open a local bank account along with a proof of the
deposit capital. Lastly, the retailer had to obtain a registration certificate from the Ministry of
Commerce.
PESTEL Analysis of the Chosen Country
The chosen country is Australia. To make an entry into Australia, Al Muntazah needs to
consider all the factors of external environment that includes, political, economic, social,
technological, environmental and legal.
Political Environment:
Australia represents a liberal capitalistic democracy. The state substantially interferes
with the economy via varied roles (Murray 2017). For instance, the parliament might take a
decision of setting up important taxes for protecting the national economy or there may be
implementation of the environmental protection laws aimed at protecting the country’s national
heritage.

10PESTEL ANALYSIS
Economic Environment:
Australia is the largest capitalist economy of world that is dominated by the service sector
(Butlin 2013). The economic growth of the country mostly depends on the mining and the
agricultural sectors.
Socio-cultural Environment:
Australia is a diverse and multi cultural country with no official religion. Most
Australians are highly educated compared to the past with English as the primary language of the
country (Banks 2015). The smaller female population in comparison to man has shaped the
national culture of the country. All Australians possess the right of expressing their beliefs and
culture and participate freely in the national life of the country
Technological Environment:
The technological aspects of Australia include automation, technology, research and
development activity, rate of the technological change and the technology incentives (Metcalfe
2018). This helps in determining the barriers to the entry, minimum production level efficiency
and impact on the outsourcing decisions.
Ecological Environment:
The water, land and air pollution is a major concern for most people. Land gets polluted
through the wastes from the industries (Keast 2013). Pollution of water takes place through
sewage and hazardous waste. However, exhaust fumes from the vehicles, acid rain and
carcinogens from the manufacturing process causes air pollution.
Legal Environment:

11PESTEL ANALYSIS
Australia has certain regulatory obligations that are necessary for business to consider
(Vitale 2013). The regulations are designed for ensuring fair competition, integrity in market and
sufficient protection from relevant parties.
Conclusion and Recommendations:
To conclude one can say that Australia is an ideal destination for business expansion by a
company based on the factors of the PESTEL analysis. The recommendation that makes
Australia an ideal market for entry by the chosen organization is as follows:
1. Australia represents a stable market with an open government and favorable tax
system. It provides competitive cost to the business with essential communications and
infrastructure
2. The market attractiveness of Australia is determined by a stable and stronger financial
system having minimum restrictions. The country also has lower public debt and lower levels of
unemployment.
3. The multi cultural aspect of the country is a huge influence on the international
business
4. In terms of technological aids, the country provides a development grant for the export
market, fund for innovation investment and tax incentive for any R&D.
5. The country also seems attractive as it puts forward a flexible business law thereby
making the procedure of opening a business quite simplistic.

12PESTEL ANALYSIS
References:
almeergroup.com 2018. [online] Available at:
http://www.almeergroup.com/almuntazah_market/en/aboutus/ [Accessed 9 Aug. 2018].
Banks, J.A., 2015. Cultural diversity and education. Routledge.
Butlin, N.G., 2013. Investment in Australian economic development, 1861-1900. Cambridge
University Press.
Castaño, M.S., Méndez, M.T. and Galindo, M.Á., 2015. The effect of social, cultural, and
economic factors on entrepreneurship. Journal of Business Research, 68(7), pp.1496-1500.
Chavan, J. and Ahmad, F., 2013. Factors affecting on customer satisfaction in retail banking: An
empirical study. International Journal of Business and Management Invention, 2(1), pp.55-62.
Dunning, J.H., 2013. Multinationals, Technology & Competitiveness (RLE International
Business). Routledge.
Falkner, R., 2017. Business power and conflict in international environmental politics. Springer.
Gupta, A., 2013. Environment & PEST analysis: an approach to external business
environment. International Journal of Modern Social Sciences, 2(1), pp.34-43.
Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European
academic research, 2(5), pp.6478-6492.
Jalal-Karim, A., 2013. Leveraging enterprise risk management (ERM) for boosting competitive
business advantages in Bahrain. World Journal of Entrepreneurship, Management and
Sustainable Development, 9(1), pp.65-75.

13PESTEL ANALYSIS
Keast, A., 2013. Biogeography and ecology in Australia. Springer.
Kinninmont, J., 2015. 7 Bahrain. Oil States in the New Middle East: Uprisings and stability.
Metcalfe, S. ed., 2018. Evolutionary theories of economic and technological change: present
status and future prospects(Vol. 44). Routledge.
Murray, G., 2017. Capitalist networks and social power in Australia and New Zealand.
Routledge.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Vicente-Molina, M.A., Fernández-Sáinz, A. and Izagirre-Olaizola, J., 2013. Environmental
knowledge and other variables affecting pro-environmental behaviour: comparison of university
students from emerging and advanced countries. Journal of Cleaner Production, 61, pp.130-138.
Vitale, M., 2013. Crowdfunding: Recent international developments and analysis of its
compatibility with Australia's existing regulatory framework.