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CS Professional · Strategic Management and Corporate Finance · Analyzing the External and Internal Environment

A listed Indian pharma company prepares a PESTEL scan. The analyst lists: (1) a competitor launching a cheaper generic, (2) a new price-control order by the government on essential drugs, (3) adoption of AI in drug discovery, and (4) an ageing population. Which item does NOT belong in the macro-environment PESTEL scan but in industry analysis?

The competitor's cheaper generic launch does not belong in PESTEL. PESTEL scans broad macro forces such as regulation, technology and demographics, while a rival's product move is a competitive force analysed at the industry level, for example through Porter's Five Forces.

  1. AItem 1, the competitor's cheaper generic launchCorrect
  2. BItem 2, the price-control order
  3. CItem 3, AI in drug discovery
  4. DItem 4, the ageing population

Explanation

PESTEL covers broad external forces affecting all firms: price control is Political/Legal, AI is Technological, and ageing is Social (demographic). A rival's product launch is a competitive action within the industry and belongs in industry/competitor analysis such as Porter's Five Forces, not the macro scan.

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