Chapter 1: Business Environments – PESTLE & SWOT

Macro Environment – PESTLE Factors

• Business has little to no control; changes can be positive or negative.
• PESTLE tool identifies six external forces:
  • Political: Government actions, stability, sanctions (e.g. \text{UN} sanctions on Zimbabwe affect SA firms).
  • Economic: \text{inflation, exchange\; rates, interest\; rates, taxes} – influence costs, selling prices & demand.
  • Social: Poverty, crime, HIV/AIDS, unemployment – alter living standards & disposable income.
  • Technological: Rapid innovation ➔
    • Threat: costly tech becomes obsolete.
    • Opportunity: gain competitive edge, reduce waste.
  • Legal: National laws (Labour Relations, Consumer Protection, Occupational Health & Safety) dictate business conduct.
  • Environmental: Pollution, natural disasters, oil spills – disrupt raw-material supply & distribution; raise carbon-footprint concerns.

Environmental Analysis Tools

• Micro: SWOT (Strengths & Weaknesses only).
• Market: SWOT (Opportunities & Threats only).
• Macro: PESTLE (full external scan).

SWOT Analysis – Core Ideas

• Internal factors: Strengths (competitive capabilities) & Weaknesses (internal limitations).
• External factors: Opportunities (favourable trends) & Threats (unfavourable forces).
• Aim: match strengths/opportunities, repair weaknesses, counter threats.

Typical Examples

• Strengths: secure raw-material access, strong brand, IP.
• Weaknesses: poor marketing, scarce resources, low-skill staff.
• Opportunities: unmet customer needs, rising demand, loyalty growth.
• Threats: hostile regulations, new competitors, economic downturns.

Characteristics of Business Environments

• Complex: Continuously changing, many competing/hostile forces; scarce resources must be allocated among stakeholders.
• Multi-faceted: One decision affects multiple stakeholders differently (e.g. automation boosts profit but cuts jobs).
• Dynamic: Constant change demands flexibility, contingency (Plan-B) & intrapreneurship.
  • Trend = gradual, predictable shift; can strategise.
  • Crisis = sudden, unexpected event; contingency often absent.

Key Takeaways

• Monitor PESTLE to anticipate macro shifts.
• Use SWOT to align internal capacity with external realities.
• Recognise complexity, multi-faceted impacts & dynamism; stay flexible, ethical and innovative.