PESTLE analysis can be an extremely effective tool in business, if used correctly. It falls under the category of ‘environmental analysis’, which is to say that it revolves around identifying the various external variables that affect a business’s performance. Specifically, these are the Political, Economic, Social (sometimes socio-cultural), Technological, Legal, and Environmental ones, hence the acronym ‘PESTLE’.
One of the handy things about PESTLE analysis in particular (as opposed to other business management/analysis tools) is that it is very easy to conduct, as long as you are familiar with the six categories. That’s why we are writing this set of articles about each of the categories, from P to E. We’ll be providing definitions, in-depth explanations, and relatable examples.
In case you haven’t already seen our previous articles in this series, we’ve already covered Political factors, Economic factors, and Environmental factors.
What Are Technological Factors?
In PESTLE analysis, technological factors are variables which relate to the existence, availability, and development of technology. This could include things from computational power to engine efficiency.
How Do Technological Factors Affect Business?
It might be unclear how technological factors can directly affect business, unless you take a step back and look at all of the technology that’s used in day-to-day life. Think about the machines which are used to print on the t-shirts you buy, the computer servers which are used to keep up the website(s) you own, or the fuel used to power the car(s) you drive. Technology hugely dictates the way many things are done, in business or otherwise.
General examples of Technological Factors affecting business include:
- The existence of 3D technology
- Computer calculation speed/power
- The ability of computers to create truly ‘random’ numbers
- Engine efficiency
- Internet connectivity
- Wireless charging
- Security in cryptography
Let’s look at how these can affect business in some more depth:
Automation — The automation of many unskilled tasks can allow companies to replace human production lines with entirely machine ones. This can reduce costs for manufacturers, distributors, supermarkets, and many other different businesses. On the flip side, the gradual increase in job automation might not be such a great thing for job search firms.
Internet connectivity — It’s undoubtable that in recent years global internet connectivity has been on the rise. This presents an even larger market for many companies who use the internet to connect with their customers. On the flip side though, a global rise in internet connectivity might mean less interest in traditional communication means, which is a negative consequence for some — telephone service providers will have to change their offerings to stay relevant, while paper-and-ink printing companies might receive less business.
Technological Factors Affecting Apple
- Competitors find little struggle in recreating many of Apple’s products.
- Growing demand for mobile technology will make the personal computer a less attractive product.
- Apple’s quite restricting native Operating Systems can limit the scope of what is possible on their devices.
- Growing numbers of cybercriminals could jeopardize Apple’s reputation for safety and security.
Read the entire PESTLE analysis of Apple on our website here.
Technological Factors Affecting Starbucks
- The development and adoption of mobile technology presents many opportunities for Starbucks. They have already teamed up with Apple to use their devices as a platform for presenting ads/discounts.
- The growing desire for internet connectivity has given Starbucks an opportunity to rebrand their coffeehouses and stand out from the competition by providing free WiFi.
- Mobile payments are slowly being introduced, which might make a morning cup of coffee more attractive to many customers (and in doing so increase their potential market).
See the full PESTLE analysis of Starbucks here.
In conclusion, technological factors are one of many external factors that can affect businesses, and are an integral part of PESTLE analysis. They can be defined as factors which relate to the presence and development of technology, on either a local or global scale. There are many different examples of technological factors which affect business, visible in companies from Apple to Starbucks.
Got other good examples of technological factors which affect business? Be sure to leave them below along with your questions and comments.
Image: Sergey Nivens/Shutterstock.com