A PESTLE analysis (formerly known as PEST analysis) is a frame or a managerial tool in strategic management used to analyze and monitor the macro-environmental factors that may have a profound impact on an organization’s performance. This tool is especially useful when starting a new business or entering a foreign market. In PESTLE P stands for politics, E stands for Economics, S stands for Social, T stands for Technology, L stands for legal and the last E stands for Environment factors.

Politics

Spanish oil giant Repsol had to face a downsizing due to political intervention in Argentina.  It started an above average profitability operations in Argentina. But the business was later impounded by the Left Wing government. So the decade long profits didn’t materialize in the end. Certain factors create Inter-linkages in many ways. US-based Google had to deal with the Chinese government’s restrictions on the freedom of speech in order to do business in China. China’s different set of political and legal guidelines made Google choose to cease its mainland Chinese version of its site and direct mainland Chinese users to a Hong Kong version.

Political system is basically the system of politics and government in a country. It governs a complete set of rules, regulations, institutions, and attitudes. A main differentiator of political systems is each system’s philosophy on the rights of the individual and the group as well as the role of government. Each political system’s philosophy impacts the policies that govern the local economy and business environment. There are more than thirteen major types of government, each of which consists of multiple variations.

Political decisions affect the economic environment for example the taxation system in the country, political decisions influence the country’s socio-cultural environment for example the LGBT; few countries are gay friendly, while most are not. Politicians can influence the rate of emergence of new technologies, politicians can influence acceptance of new technologies. Political factors relate to how the government in a country mediates in the economy. Political factors are government regulations that influence business operation positively and negatively. Managers must keep a bird’s eye view over political factors. These factors can be current; they can be impending legislation, political stability and changes, freedom of speech, protection and discrimination laws etc. Political factors are inclusive of tax policies, labor law, environmental law, trade restrictions, tariffs and the most important of all political stability.

Economics

Nike has invested largely on their women’s footwear, clothes and equipments for women in Pakistan since the women are getting more liberal in Pakistan. Pakistan is already one of the primary suppliers for the Nike’s sports items. The rich Pakistanis are brand conscious and spend conspicuously on themselves.  Another good example of economic factor is of Coca-Cola operations in countries because of wages. Wages influence the company’s production costs; in countries like the UK they are quite high, whereas in Asian countries the salaries are low. Therefore, Coca Cola manufacturing is on higher side in Asian countries.

There are two great economic factors affecting business models they are demand and supply. Demand is how willing and able a consumer is to purchasing what a business offers and supply is how able the business is to make available what the consumer needs. Economic factors include economic growth, interest rates, exchange rates and inflation rates. These factors greatly affect how businesses operate and make decisions. For example, interest rates affect a firm’s cost of capital and therefore to what extent a business grows and expands. Exchange rates can affect the costs of exporting goods and the supply and price of imported goods in an economy.

Social

Because Pepsi is no-alcoholic drink, it has to maintain the strict differences in cultures around the world. It is essential for Pepsi to communicate its image as a global brand to change people’s perception. Pepsi values all the festivals in order to relate to their market.  Reacting to the social factor has helped Pepsi cash upon the opportunity of increasing sales during festive seasons around the world. Since June 1, 2011 a smoking ban in all of Argentina prohibits smoking in workplaces, all public indoor areas, schools, hospitals, museums and libraries, theatres, and all public transport. However, smoking is still allowed in balconies, terraces and patios. The law also included the prohibiting of advertising and sponsoring of tobacco. The fine for breaking the law is equivalent to 250 to 1,000,000 packets of the most expensive cigarettes in the market. Imagine, how cigarette companies could advertise in Argentina?

This measurement of the general environment represents the demographic characteristics, norms, customs and values of the population within which the organization operates. This includes population trends such as the population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers. These factors are especially important for marketers when targeting certain segments. It also includes the local workforce and its willingness to work under certain conditions.

Technology

Apple, Google, Blackberry and Microsoft have changed the information technology scene completely. Google is the most widely used search engine on the internet today. It receives over 3 billion online searches on a daily basis. It was created in 1997 by American computer scientists Larry Page and Sergey Brin.

Technological factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably. The progress in technology refers to technology incentives, the level of innovation, automation, research and development (R&D) activity, technological change and the amount of technological awareness that a market possesses. These factors may influence decisions to enter or not enter certain industries, to launch or not launch certain products or to outsource production activities abroad. By knowing what is going on technology-wise, the management of organizations may be able to prevent its company from spending a lot of money on developing a technology that would become obsolete very soon due to disruptive technological changes elsewhere. Technological Factors are linked to innovation in the industry, as well as innovation of the overall economy. Not being up to date to the latest trends of a particular industry can be extremely harmful to operations.

Legal

The foremost criteria include ease of starting a business, ease of obtaining construction permits, access to electrical utilities, ease of registering property, availability of credit, protection for minority investors, tax rates and collection methods, capacity for trade to occur across borders, and ease of enforcing contracts and declaring insolvency. Labor market regulation is also considered in compiling these rankings. It takes few hours to start a business in New Zealand. Thanks to a simple online procedure! High standards of living combined with one of the world’s most skilled labor forces are among the many factors that make Sweden an excellent country within which to carry out business and trade. Its strong infrastructure and well-developed social programs are strong incentives as well.

Although these factors may have some overlap with the political factors, they include more specific laws such as discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright and patent laws, and health and safety laws. It is clear that companies need to know what is and what is not legal in order to trade successfully and ethically in a country.

Environment

Through 2011, Bhutan experienced accelerated economic activities pressured natural resources such as land, air, and water. Development activities increased urbanization, industrialization, mining and quarrying, agriculture, and solid waste management projects. Land degeneration, biodiversity and habitat loss, high fuel-wood consumption, and human-wildlife conflicts are some of Bhutan’s environmental challenges. Notwithstanding these problems, Bhutan remains overall carbon-neutral.

Environmental factors have come to the forefront recently. They have become important due to the increasing scarcity of raw materials, increased pollution and carbon footprint. Environmental factors include ecological and environmental aspects such as weather, climate, environmental offsets and climate change which may especially affect industries such as tourism, farming, agriculture and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer. This has led to many companies getting more and more involved in Corporate Social Responsibilities (CSR) practices and sustainability.

Social media gives everyone a chance to express their feelings. While many are vocal about their feelings, there are quite a few others who find it difficult to express themselves in words. They are shy, rigid to some extent while expressing their real inner feelings. It need not be physical fighting anymore, these days most people have taken to social networking sites to vent out their frustrations. However, what’s worrying is the impulsiveness of these vents; it just takes a few seconds for people to voice themselves on this platform. Here’s how this platform has lately generated a marathon of impulsive outbursts and why.

Salman Khan’s tweets on Yakub Memon’s death penalty recently did not go down well with the public. A few hours later, he was forced to delete them. Why are some people so impulsive to tweet?

Donald Trump’s presidential campaign has seen many surprises. In July, even as the topic of immigration heated up between candidates, Trump re tweeted an offensive comment about the former Florida Governor Jeb Bush that said, “JebBush has to like the Mexican Illegal’s because of his wife.” Neither Trump nor his campaign commented on the decision to delete the tweet.

The point is tweeting or face book is a simple process. It’s the easier way to vent out your feelings, you can write as much and whatever you wish to, without mentioning who it is for. With new age connectivity, your outbreak will be in public in a fraction of seconds. It’s become so simple to connect with the world. One need not sulk in a cocoon.  The person can have a good experience; so many people want to rush to the sender’s aid. Social networking has a wide reach. Everyone from your close friends to acquaintances to friends of friends as well as others across the globe can see your post and get a fair idea about the state of your mind. Many of these contacts want to rescue you, do well to you. Why not take a chance?

But, while the response can be gratifying:  the response to your outburst can be so flattering that you feel triumphant about the situation. You’ve been empathised and sympathised with as well as garnered a lot of praise for being so courageous. This encourages you to rage an online war anytime. But on the flip side: once posted, the world is given something to gossip about what you are going through. That’s not all, this being an impulsive outburst, is obviously not backed with reason and thought. The words that come to your mind immediately after a argument might change later on. After you are cooled down, you might have a different angle to look at your problem.  However, the damage is already done; in spite of the ‘delete post’ option, the post still remains in the database of the people who responded over it, in their inboxes and notifications at times. Finally, although an outburst of a temporary state of mind, this action causes a permanent damage, if the person is of concern to you.

Friends, social networking is alike a match stick in hand: if you use it properly its fine else it burns your goodwill. We tend to take our digital personas lightly at times, than we present ourselves in reality. We can mask our personas on social media but in reality.

Individuals who are more impulsive and get distracted easily may be drawn to social media for anything and everything. For some time they do get solace; their experience with these media then encourages them to jump quickly from one event to the next, further developing their tendency to respond impulsively can be reduced if only they decide firmly.  Let’s not treat the social media as garbage box. Stop for a moment before you want to wash your dirty linen in public.

Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss and improving systems by inventing new approaches, and creating solutions to change society for the better. While a business entrepreneur might create entirely new industry, a social entrepreneur comes up with new solutions to social problems and then implements them on a large scale. The new breed of social entrepreneurs are focused on their enterprise, they have workable solutions for dormant and rigid social problems.

Contemporary economists and management writers like Baptist Say, Joseph Schumpeter, Peter Drucker and Howard Stevenson have defined entrepreneurship with slight variance but the same perspective that entrepreneurs are individuals who create value, those who are innovators, those who are change agents in society etc. Social entrepreneurs are close to all these definitions created by various economists. The only difference being that of social entrepreneur is entrepreneurs with a ‘social mission’, for a social entrepreneur social mission if explicit and central theme.  This affects how they perceive and assess opportunities.  The criterion of the social entrepreneur definition is mission-related enterprise; not merely wealth creation. Social entrepreneurship has gathered a momentum because of large numbers of NGOs and organizations working for a social cause. The description of social entrepreneur can thus be put as follows:

1. Social entrepreneurs play the role of change agents in the social sector by adopting a mission to create and sustain social values.

2. They recognizing and relentlessly pursue new opportunities to serve a mission.

3. They engage themselves in a process of continuous innovation, adoption and learning.

4. Once they accept a mission, they act boldly without being limited by resources in hand.

5. Thus they exhibit heightened accountability for a cause.  They are fewer in numbers.

I give here below account of two young Indians who have turned small ideas into big production.  We are living in a world which is constantly looking for solutions to small and big problems we face every day in our lives. And, let us accept this fact that public administrations cannot work alone and they are more and more looking for innovative solutions coming from civil society. People like Rikin and Anshu are a rare breed of youngsters who have guts to give up their comfortable, prospering careers and bring in some stunning solutions to some societal problems.

Let’s look at Rikin Gandhi’s Digital Green enterprise to understand while he works locally, his innovation has global applicability.

RIKIN GANDHI – CEO of DIGITAL GREEN

Rikin’s story is awesome. He’s an aerospace engineer from the Massachusetts Institute of Technology and a licensed private pilot, who could make a coveted career in the US Air Force as he was chosen by them. It seems so many people who travelled to space, saw earth from up above and wondered why there was poverty and war on this beautiful planet. Many of them after coming back to earth went on to become public school teachers or farmers in the Midwest, this was their way of connecting with people. Stories like these inspired Rikin. He learned through a friend of his who was working on biodiesel project in Maharashtra, about pathetic conditions of farmers. So many of them commit suicides due to mounting debts which they cannot service; their dependability of monsoon and poor quality of infrastructure are unsolvable problems.  Rikin decided to do something for the farmers.

Digital Green is Rikin’s brainchild. He decided to use his handy cam as a tool for social networking with the farmers. The method was simple: the farmers recorded their problems, solutions and success stories; this information is recorded and edited. Further, it is reached via videos to those who need the advice that too from the horse’s mouth – the notional truth from the practical source itself. This gave birth to Digital Green a social enterprise.

Microsoft Research has set up a lab in Bangalore to look at technologies for emerging countries in sectors such as microfinance, education, agriculture and study about how technology can be used to improve the lives of people. Digital Green was initially incubated in the Microsoft Research India lab.

The idea of Digital Green is to use relevant videos to educate the farmers on scientific methods of farming which in turn will help them increase their yield resulting in prosperity. The videos are localized in terms of language and socio –economic background of the audience. Producing and distributing locally relevant videos involving the local community. The videos consists information on farming by farmers, of farmers, and for farmers. The company works with NGOs which play an important role in identifying “resource persons” from the community who can produce the videos and to have the subject-matter expertise for ensuring the quality of the videos. They identify topics of interest and make short videos of local farmers. Distribution also happens through community; some of the community members go back to their respective villages by using Pico projectors which are the size of mobile phone which are used for smaller groups. These groups come together on a regular basis. It could be about sowing, soil standards, nursery raising or weeding based on the season.

Digital Green wants to expand in India and reach out to many farmers in developing nations like Africa. It has built a technology platform with IVR (Interactive Voice Response) so that farmers will be able to interact with each other and ask questions to the experts; thus, scaling up this platform. Digital Green, which received a $3-million grant for three years from the Gates Foundation, has so far covered more than 300 villages and aided over 17,000 farmers in Andhra Pradesh, Orissa, Jharkhand, Madhya Pradesh, Tamil Nadu and Karnataka. India needs many more Rikins today.

The social entrepreneurs seek to create systematic change in the society for a cause.  While doing so though they act locally, their actions have the potential to stimulate global improvement.  The cause can be education, health, economic development, environment, racism, socially weak people, and arts, anti corruption, old age, prostitution etc.

Ian Macmillan, Director of the Wharton’s Entrepreneurs research Centre defines social entrepreneurship as a process whereby creation of new business enterprise leads to social wealth enhancement so that both society and the entrepreneur benefit.   These benefits according to Macmillan can be creation of jobs, increased productivity, enhanced national competitiveness, contribution of the cause to the GDP of the nation, enhanced image of the cause in the globe etc. The social entrepreneur has enlarged vision and heart of gold.

There are limitations to define social entrepreneurship because a wide range of opinions exists on this topic.  There are many scholars who are still researching this topic in various universities in the world. This subject is being discussed for past two decades, though social entrepreneurs existed for ages.

I cannot resist from giving the example of Goonj.

GOONJ of ANSHU GUPTA

Anshu Gupta is popularly known as the Clothing Man. He started his career as a freelance journalist. He left his flourishing career in 1998 to start GOONJ. Anshu’s mission in Goonj is to make clothing a matter of concern.

GOONJ works on the basic issue of clothing. Usually one talks of ‘roti, kapda aur makaan’ meaning food, clothing and shelter. It’s a matter of disgrace – the women in economically weak households who don’t have enough clothes to wear, have a big problem during their menstruations; they don’t have a piece of cloth for using. In the absence of a clean piece of cloth, menstruation is a disaster for a woman, which goes on for 30 to 35 years in her life. This subject is taboo. For your information – in the Sunderban Delta of West Bengal even today women use the same piece of cloth for over a year. Even if it is almost like stone, they still use it, because there is no access to a piece of cloth.  That is the height of poverty – the non-accessibility to basic necessities. Visualize how many clothes we discard without a thought.  In the village surveys conducted by our health facilitators as part of their training, it came out strongly that menstrual hygiene and sanitation were a major concern leading to vaginal and reproductive tract infections. Most of the women were using cloth, which was not being washed and dried properly, resulting in poor hygiene.

In 2004, when Anshu and his associates started talking about the issue, they discovered how even urban women feel uncomfortable talking about it. So when Anshu and his group googled ‘sanitary pad’ or ‘sanitary napkin,’ there was hardly any research or work happening on this topic. They could only find information about fancy disposable products from different countries. The group realized that they need to work in this direction. No cloth is ever wasted. The most vital of all products that Goonj makes are sanitary napkins of its own design. Each set has three parts: a waist-string, a small absorbent pad and a palm wide strip to hold the padding in place while its ends are tucked under the waist-string. Ten sets are packed with care into a drawstring pouch for women to receive without embarrassment.

The left over clothes are converted to school bags, tote bags, quilts, and mats. A great quantity is converted into narrow tapes to be used as drawstrings for petticoats. The ultimate, unusable waste is chopped up and stuffed into pillows and quilts.

GOONJ has emerged as the largest non -monetary resource agency while people also call it one of the largest civic participation movements!! It runs is a unique resource mobilization initiative that provides clothes, sanitary napkins, and other basic amenities to millions in rural villages. With an emphasis on mindful giving and dignified receiving, Goonj also provides a constructive channel for the growing quantities of waste from urban households.

Goonj does it all on a shoestring budget. In exchange for clothes, Goonj requires its beneficiaries, the rural people to take on community development projects. So far, thousands of people have undertaken more than 900 community projects, from building bridges to repairing roads etc. Rather than receiving bad, ill-fitting donated clothes for nothing, because of Goonj’s mission, community members receive well-suited, often-tailored, second-hand clothes.

Goonj’s passion is to encourage graceful giving and graceful receiving. Goonj wants people to give mindfully; the clothes they donate are of great value by recipients. Goonj is quietly creating magic with other’s waste. On an average every year this NGO recycles 1 million kilogrammes of textiles that urban Indians no longer want or need and they make 2 million sanitary napkins for rural areas. The next time you want to throw your used clothes, think for a moment about Goonj. This NGO has earned many national and international awards.

I salute Rikin and Anshu for their untiring and pioneering work!!!