CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
Tarang Textiles, an Indian apparel maker, notices that the government has announced a new production-linked incentive scheme for technical textiles and has also tightened labour code compliance norms. In a PESTEL analysis, these developments are best classified under which factor?
The developments are Political factors in PESTEL, because government schemes, incentives and compliance norms arise from governmental policy and regulation. Economic factors deal with macro variables such as inflation, interest rates and growth, which are not what the incentive scheme and labour code changes represent.
- AEconomic
- BPoliticalCorrect
- CSocial
- DTechnological
Explanation
Government policy, incentives, regulation and labour law changes fall under the Political factor in PESTEL (legal aspects are often treated alongside it). Economic factors relate to inflation, interest rates, growth and exchange rates, which are not the focus here.
Did you get it right without looking?
One question tells you little. A timed set on Strategic Analysis: External Environment shows your real accuracy, how long you take and where you lose marks.
More Strategic Analysis: External Environment questions
- Ravi Textiles operates in an industry where many buyers purchase standardised cotton yarn, switching suppliers costs buyers almost nothing, …
- A regional Indian airline operates in a market where fares are set by aggressive price cuts, rivals have high fixed costs and exit barriers …
- Kavya Foods operates in an industry where products are nearly identical, many small rivals exist, industry growth is slow, exit barriers are…
- Himalaya Electric, an electric scooter maker, is assessing its position. Which of the following observations is an example of a barrier to e…
- A regional airline operates in a market where fares are cut frequently, fixed costs are high, rivals are of similar size, and exit is costly…
- A cement manufacturer is studying its industry. It finds that capital requirements for a new plant are very high, existing players enjoy cos…