Companies are always looking to evolve and make progress in their respective industries. In order to compete with others firms or maintain their high standards, they must devise new business strategies from time to time. This requires them to take into account certain external factors that affect the firm or the industry as a whole. Firms use the PESTLE analysis to assess these factors. The PESTLE analysis consists of political, economical, social, technological, legal and ethical factors that play a significant role in the management process of a firm and its environment (Ian Worthington, 2009). .
The political environment of a country greatly affects its business activities. Firms must take into account factors such as the level of political stability, policies of the current government and the amount of interference by the market place. The macroeconomic environment is perhaps the most important of all the factors. This refers to the country's general economic policy and more importantly, the economic conditions of the country, such as: interest rates, exchange rates, level of inflation, employment statistics and consumer behaviour. Social factors account for social mobility, living standards, and the cultural elements that play a role in the functioning of the society. More importantly, demographics, which encompass the size, structure and contribution of the population, are a very important part of the social factor. Technology's role is also very crucial, as it aids in the development of new products and processes, and therefore a substantial investment in the research and development department is essential for the growth of a firm or industry. The legal aspect mainly refers to laws applying to businesses and procedures carried out to handle disputes. Ethical factors reflect the ethical guidelines within a company, industry or even a country that have to be followed by employees and employers, that have an effect on the firm and society at large.