Entry 4 (IY1 Introduction to Business and Management)

Entry 4

In this entry, I am going to discuss macro environment, PESTEL analysis and stakeholders. 

The definition of macro environment

The macro environment is defined by Jones and George (2008) as " the wide-ranging global, economic, technological, sociocultural, demographic, political, and legal forces that affect an orgnaisation and its task environment.

The defintion and importance of PESTEL analysis  

A PESTEL is an acronym that stands for Political, Economic, Social, Technological, Environmental and Legal factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves and as threats. For this reason, some say that PESTEL is an appropriate term for these factors (Nejati et al., 2008).

The examples of PESTEL factors 

1) Political : Taxation policy, Privatisation and deregulation policies, Environmental legislation, Health & safety regulations, Public expenditure controls, European Union directives and Government stability.   

2) Economic : Interest and inflation rates, Consumer confidence, The business cycle, Economic growth prospects, Unemployment rates and Disposable incomes.

3) Socio-cultural : Values in society, Changing consumer preferences, Levels of education and Changing lifestyles. 

4) Technological : Alternative means of providing services, Scientific discoveries, Changing communications technology, New production technology and State of infrastructure. 

5) Environmental : Climate change, Water resources and Energy Supplies. 

6) Legal : Employment law, Company law and Business regulation.  

                                  
                                               

 

 

The definition of stakeholders

 

Freeman and Reed (1983), for instance, suggest one broad and one narrow interpretation of the term stakeholder. The wider definition embraces "any identifiable group or individual who can affect the achievement of organisation's objectives or who is affected by the achievement of an organisation's objectives" (Freeman and Reed, 1983: 91). In a narrow sense, the authors define a stakeholder as "any identifiable group or individual on which the organisation is dependent for its continued survival" (Freeman and Reed, 1989: 91).

 

 

                                                           

In the light of my own experience in an English academy, we had the problem related to the number of students when Korea was in a robust economy. In other words, enonomical factor that is one of the PESTEL analysis's factors had a major influence on our English academy. On top of that, increased tax plus recession caused decrease of investing private education from millions of parents.

In conclusion, I examined the defintion of macro environment, PESTEL analysis and stakeholders. In addition, I described the economical factor of  influence on my former English academy with my own experience. Consequently, companies should take into consideration a lot of factors in order to survive in a fast-changing business.