As a CFO or FP&A you will be required to support strategic decision making about geographical expansion in a certain market, and the first situational analysis that should be done is the PESTEL analysis. So, what is PESTEL analysis?
It is about analyzing the external factors that impact or could potentially impact the Business in the potential market from 6 angels:
1. Political:
Any political factors that impact or could potentially impact the Business. Examples: A new government, a new initiative, a change of policy, etc.
2. Economical:
Any Economic factors that impact or could potentially impact the Business. Examples: A change in disposable income, an economic downturn, currency fluctuation or devaluation, etc.
3. Social:
Any Sociological factors that impact or could potentially impact the Business. Examples: The demographic change of a company’s customers, a change in the cultural habits of the population, a change in lifestyle, etc.
4. Technological:
Any Technological factors that impact or could potentially impact the Business. Examples: A new software, device, patents, internet infrastructure, etc.
5. Environmental:
Any Environmental factors that impact or could potentially impact the Business. Examples: the use of plastic bags for goods, the use of electrical cars, environmental regulations, etc.
6. Legal & regulations:
Any Legal factors that impact or could potentially impact the Business.
Examples: Competitive regulations, employment law, Data protection, etc