CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
An Indian IT services firm scans its environment and finds that: (i) the rupee has depreciated against the dollar, (ii) a new data-protection law will raise compliance costs, (iii) AI tools are automating routine coding, and (iv) clients are shifting to remote delivery. It wants to rank these by likelihood and impact before planning. Which approach best describes this activity, and which item is a legal factor in PESTLE?
The activity is environmental scanning with prioritisation of external factors, and the data-protection law is the legal factor. Rupee movement is economic, AI automation is technological, and core competence or value chain analysis concerns internal, not external, analysis.
- AEnvironmental scanning with prioritisation; item (ii) is legalCorrect
- BCore competence analysis; item (ii) is political
- CValue chain analysis; item (iii) is legal
- DEnvironmental scanning with prioritisation; item (i) is legal
Explanation
Scanning external factors and ranking them by impact is environmental scanning (with issue prioritisation). A data-protection law is a legal factor. The rupee depreciation is economic and AI automation is technological, so options with those as legal are wrong, and core competence/value chain are internal tools.
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