The first step to have an effective strategic management is to have a clear strategic analysis of current factors relevant to the company’s operational environment . One the strongest tools to evaluate the external factors is PESTEL (Political,Economic, Social, Technology, Environmental and Legal...
The first step to have an effective strategic management is to have a clear strategic
analysis of current factors relevant to the company’s operational environment
(Yüksel, 2012). Generally, the term environment includes both internal (resources
and capabilities) and external (beyond company’s control) (Thompson et al., 1981).
Yüksel (2012), articulate that external environment comprises sectoral environment
(where company sells its services or goods to the customer) and macro environment
which we mostly known as PESTLE tools.
Strategies sought to find out the external factors to evaluate and evolve their
business models to survive in present competitive advantage (Sammut-Bonnici &
Galea, 2015). The aim of PESTEL analysis is to look broadly over the all possible
factors that might affect the business future success or failure (Alanzi, 2018).
Team FME (2013), propound the evolution of PESTLE and different definitions of it
such as PEST, STEPE, ETPS, etc. Thompson and his colleagues (1981),
demystified that to evaluate company’s macro environment, five forces model of
competition (Porter’s model), SWOT, PESTEL, driving factors and etc. should be
considered to have an effective strategic planning.
The analysis below will focus on Johnson & Johnson company, specifically one of its
branches in Iran based on five years of work experience in their sales department.
Johnson & Johnson is a company with more than 130 years of experience in
pharmaceutical and healthcare market. PESTLE Analysis of company will examine
the various external factors which affect the business. Following the PESTEL
framework is mandatory for all companies and businesses to help them have a
better comprehension about market dynamic and turbulences. Johnson & Johnson
PESTLE Analysis will be as follow:
Political Factors:
Political factors have a vital role in assessing factors impacted Johnson & Johnson's
long-term profitability in a certain country or market. Government intervention and
political situation have a direct impact on particular market. For instance, different
level of political sanctions (2016-2020) on Iran or restriction of transportation during
COVID pandemic altered the level of growth and profit in a period of time directly and
indirectly. Clearly, risk of military invasion is one of the chief political concern in
middle east. The level of corruption, tax regulation, legal framework for trading and
tariffs are some the major factors concerned by Johnson & Johnson high standards
and credo’s all over the worlds. Pricing, wage legislation and work week are also
making complexity for the high level of Johnson & Johnson broadly.
Economic Factors:
Any successful venture, likewise Johnson & Johnson, will seriously consider
economic factors such as inflation rate, foreign currency exchange, labour rate,
economic cycle in companies of operation in their decision-making. Generally,
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