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CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment

A regional pharmaceutical company observes: (i) the government has announced price controls on essential medicines, (ii) a rise in the elderly population is increasing demand for chronic-care drugs, (iii) a new patent regime restricts copying of formulations, and (iv) adoption of AI-based drug discovery by rivals. Which classification of these factors under PESTEL is correct?

The correct classification is price controls as Political, the ageing population as Social, the patent regime as Legal and AI drug discovery as Technological. Government policy, demographics, statutory rules and innovation each map to these PESTEL categories, while the other options misclassify at least one factor.

  1. A(i) Political, (ii) Social, (iii) Legal, (iv) TechnologicalCorrect
  2. B(i) Economic, (ii) Social, (iii) Technological, (iv) Legal
  3. C(i) Political, (ii) Economic, (iii) Legal, (iv) Social
  4. D(i) Legal, (ii) Technological, (iii) Political, (iv) Environmental

Explanation

Government price control is a policy action, so it is Political. An ageing population is a demographic, hence Social. The patent regime is a statutory rule, so Legal. AI-based drug discovery is Technological. The other options mismatch at least one factor.

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