PESTLE Analysis and Porter's Five Forces Overview

A comprehensive set of flashcards covering key terms and concepts related to PESTLE analysis and Porter's Five Forces model for business analysis.

PESTLE

Framework used to analyze a business's external environment considering Political, Economic, Social, Technological, Legal, and Environmental factors.

Political Factors

Elements such as tax policies, trade policies, political stability, and government regulations that can influence business operations.

Economic Factors

Factors including inflation rates, exchange rates, economic growth, and consumer disposable income which can affect business performance.

Social Factors

Trends related to demographics, lifestyle attitudes, and cultural barriers that impact market demand.

Technological Factors

Factors involving innovation, automation, and technological advances affecting business processes.

Legal Factors

Regulations and laws, including employment laws and consumer safety laws, that govern business operations.

Environmental Factors

Elements related to climate change, sustainability, and energy consumption affecting business practices.

SWOT Analysis

A strategic planning tool assessing Strengths, Weaknesses, Opportunities, and Threats related to a business.

External Influences

Factors from outside a business that can affect its operations and strategies, including economic conditions, laws, and market trends.

Dynamic Markets

Markets characterized by rapid changes, innovation, and competitive shifts that require businesses to adapt quickly.

Porter’s Five Forces

A strategic framework a business can use to analyze the competitive intensity and attractiveness of an industry by evaluating five key forces: Competitive Rivalry, Supplier Power, Buyer Power, Threat of Substitutes, and Threat of New Entry.

Competitive Rivalry

The intensity of competition among existing firms in an industry, significantly affecting factors like pricing, advertising, and marketing strategies, which can erode overall profitability.

Supplier Power

The leverage suppliers have to increase prices or reduce the quality of goods and services, influencing a buyer's cost structure and overall profitability. High supplier power can reduce profit margins for buyers.

Buyer Power

The ability of customers to force down prices, demand higher quality, or play competitors against each other. Strong buyer power can lead to reduced sales prices and increased costs for businesses, impacting an industry's profitability.

Threat of Substitutes

The likelihood that customers will switch to different products or services that can satisfy the same need. A high threat of substitutes can limit an industry's pricing power and reduce potential revenue.

Threat of New Entry

The risk of new competitors entering an industry, which can erode existing firms' market share and profitability. This threat is primarily influenced by the presence and strength of barriers to entry.

Barriers to Entry

Obstacles that deter new companies from easily entering a market, thereby protecting existing firms' profitability. Examples include high capital requirements, proprietary technology, strong brand loyalty, regulatory hurdles, and access to distribution channels.