You’ll learn about the small business you’ll be collaborating with throughout the term and will conduct a thorough organizational diagnosis using the PESTELE framework and SWOT analysis. The organizational diagnosis will help you to have a deep understanding of the external marketing environment and unique values of your client’s business.
PESTELE analysis
A PESTELE analysis is a tool, or a framework to understand, analyze, and monitor the external marketing environment (macro-environmental factors) that have an impact on the business. The results from the PESTELE analysis could be used to identify threats and weaknesses for a SWOT analysis. PESTELE stands for: P – Political | E – Economic | S – Social | T – Technological | E – Environmental | L – Legal | E – Ethical
Identify the significant factors stated that could impact your client’s business, discuss why they are important and what specific impact they might have. Below are some examples of things that might be considered in each of the factors. You do not need to address all of these. ONLY discuss the factors that will impact your business. If they will not have an impact, you can mention this.
Full Answer Section
Factors with Minimal Impact (Examples):
- International trade agreements: Unless the bookstore is directly importing a large volume of books, international trade agreements are unlikely to have a significant direct impact.
- National political elections (in a stable democracy): While political climate can influence general consumer confidence, national elections in a stable democracy might not directly and significantly impact a small bookstore's day-to-day operations. Local elections, however, could be more relevant due to zoning and local regulations.
By analyzing these PESTELE factors, "The Book Nook" can identify potential threats and opportunities, which will be crucial for the next step: the SWOT analysis.
Sample Answer
Okay, let's conduct a PESTELE analysis for a hypothetical small business client. For this example, I'll choose a small, independent bookstore specializing in rare and collectible books, also selling new releases and hosting author events. This allows us to explore a range of PESTELE factors.
PESTELE Analysis for "The Book Nook" (Hypothetical Bookstore)
Here's an analysis focusing on the significant factors impacting "The Book Nook":
P - Political:
- Local zoning regulations: These are important because they can restrict the bookstore's location and operations (e.g., signage, hours of operation). Changes in zoning could force relocation or limit expansion.
- Minimum wage laws: Increases in the minimum wage could impact the bookstore's operating costs, potentially requiring price adjustments or staff reductions.
E - Economic:
- Inflation: Rising inflation can decrease consumer spending on non-essential items like books, impacting sales. It also increases the bookstore's costs for supplies and potentially rent.
- Interest rates: Higher interest rates could make it more expensive for the bookstore to borrow money for expansion or inventory purchases.
- Consumer confidence: If consumer confidence is low, people are less likely to spend money on discretionary items, negatively affecting book sales.
S - Social:
- Changing reading habits: The rise of digital media and e-books presents a significant challenge. The bookstore needs to adapt by offering unique experiences, community events, and specializing in areas that digital platforms don't fully address (like rare books or in-person author interactions).
- Community involvement: The bookstore's role as a community hub is crucial. Positive social perception and active community engagement can drive customer loyalty and support.
- Trends in leisure activities: Shifts in how people spend their free time (e.g., more time online) can affect the bookstore's foot traffic. The bookstore needs to offer experiences that can compete with other entertainment options.
T - Technological:
- E-commerce platforms: While a threat, e-commerce can also be an opportunity. The bookstore needs a strong online presence to reach a wider audience and compete with online retailers. They could sell rare books online or offer online booking for events.
- Digital marketing: Effective use of social media and other digital marketing tools is essential for reaching potential customers and building brand awareness.
- Point-of-sale systems and inventory management software: Adopting modern technology can improve efficiency, track sales, and manage inventory effectively.
E - Environmental:
- Sustainability: Consumers are increasingly environmentally conscious. The bookstore can attract customers by using recycled materials, offering eco-friendly products, and promoting sustainable practices.
L - Legal:
- Copyright laws: The bookstore must comply with copyright laws regarding the sale of books and other materials.
- Accessibility regulations: The bookstore needs to ensure it is accessible to people with disabilities, complying with relevant regulations.
E - Ethical:
- Fair trade practices: Sourcing books and other products from ethical suppliers can enhance the bookstore's reputation and appeal to ethically conscious consumers.
- Data privacy: Protecting customer data is crucial, especially with online sales and marketing. The bookstore must comply with data privacy regulations.