Any business enterprise is subject to both external and internal; factors affecting its operations. This is mainly exhibited by the output of the business with regard to the factors affecting it. The external factors affecting the business form the macro-environment of the business and are commonly referred to as macroscopic factors of the business entity. The internal factors form microscopic environment of the business and are also referred to as microscopic factors. Macroscopic factors are all the factors that affect the business from outside its boundaries. These factors includes: suppliers, culture, market share, customers political and economic factors. Microscopic factors on the other hand affect the business operation from within the business boundaries. A good example of internal factors is employee relation within the business entity. Macroscopic environment has very great impact on the operation of a business entity. For a better and clear understanding, let us analyze one limited liability company and assess its external and internal environments (jiscinfonet.ac.uk/tools/pestle-swot).
For our SWOT and PESTLE analysis, we are to use Safaricom Company. This is a limited liability company which deals with provision of telecommunication services. This company is based mainly east Africa and operates on all telecommunications services including internet access services (oppapers.com/subjects/swot-analysis-of-safaricom-kenya-limited-page4.html).
Political factor dictates the governance of an area. Safaricom Limited is a company based in Kenya where it can be said to enjoy a conducive political atmosphere. In cases of some political instability as it happened in the year 2007, the company loses some of its profits through loss of clients and reduced use of the company services (Armstrong, 36).
The economy of a country directly affects the economy of a business enterprise. This is because the limited liability business depends on the major nationwide economy so as to operate. Thus, if the economic status of a country is poor and inflation is high, companies operating in that economy will feel the same heat causing them to offer products at exorbitant charges. As an example, the economic status of Kenya is unstable and inflation is very high. This has translated in very high call rates and reduced off peak hours offered by Safaricom Limited (oppapers.com/subjects/swot-analysis-of-safaricom-kenya-limited-page4.html).
One of the factors that this company embarked on during its launch is the social organization of the people. By monitoring the social organization of people in the region, the company was able to offer a variety of tariffs according to social classes making it possible to cover people from all scopes of economy.
Of late, this company has embarked on changing its production or service provision technology. This has been evidenced by the introduction of mobile money transfer via cell phones. M-Pesa is a service offered by this company for money transfer. Being the first to introduce this service in the region, the company was able to secure and expand its market outreach.
The legal operation of the company is ascertained by the adherence of the company to the taxation requirements which is under the law. This makes the company to operate according to the legal requirements of the country (oppapers.com/subjects/swot-analysis-of-safaricom-kenya-limited-page4.html).
The other environmental factors which are mostly associated with the geographical location of the business also affect the business. These factors directly impact on the business entity by affecting client distribution. Considering the nature of the business, environmental factors like geographical location do not have much effect on the business (Armstrong, 42).
The main difference between PESTLE and SWOT is that PESTLE come before SWOT and mainly deals with macro- factors to the business while SWOT is more inclusive covering all factors whether micro or macro. A summary of these two acronyms is given below form better and clear understanding.
Political factor – tests for political stability and effect of political atmosphere on the business. The atmosphere may be global, nationwide or institutional.
Strengths – dictates the main sources of power of the business in operation. It forms the backbone of the business entity.
Economic factor – looks at the general economic dynamics of the institution, nation or the globe.
Weakness – areas or factors of the business that makes the business lag behind others in operation.
Social factor - analyzes the immediate social environment of the business entity.
Technological – what is the current, relevant and most applicable and advantageous technology in the production or operation of the business.
Opportunities – Areas that can be exploited fully or from another perspective to give the business entity a competitive advantage over its competitors.
Legal factor – Tests legality of operation of the business entity.
Threats – areas whose weaknesses have already started sending some warning signals to the business and calls for concentration and analytical approach.
Environmental factors – Looks that the general factors surrounding the business operation mainly from the immediate surroundings. It covers mainly geographical and demographic factors.
Looking at the usefulness of these analytical approaches to business, the executive of the business may apply them to analyze the business or another business idea and determine its viability. In short, these two approaches help outline and analyze a business controlling its operation (jiscinfonet.ac.uk/tools/pestle-swot).
In the actual political organization of the business entity, team work may be encouraged or discouraged. Looking at the company of my choice, teamwork is effectively enhanced by the organizational behavior. This has also impacted greatly on use of technology in the same company. Taking into account the fact that this company is a telecommunications company, adoption of the most recent technology is very common. In the recent past, the company has adopted a new technology to secure mobile money transfer more and reduce cyber crimes in internet service provision.
In conclusion, PESTLE and SWOT offer a very good analytical approach to business which offers the executive with options and recommendations as to how and why to approach a certain situation. Therefore, it is highly recommendable for a business carry out these analytical tests to ascertain the operation of the business.
Martin M. Management Techniques. London. Palgrave Macmillan. 2011. Print.
Armstrong, M. A handbook of Human Resource Management Practice. London: Macmillan Publishers. 2006. Print.
William, K. Introduction to Management Practices. New York. Blake Publishers. 2011. Print.