CA Intermediate · Financial Management and Strategic Management · Strategic Analysis: External Environment
Which of the following is a component of the macro-environment analysed through a PESTEL framework, rather than a force of Porter's Five Forces model?
Changes in environmental protection laws affecting all industries belong to PESTEL, because PESTEL examines broad macro-environmental factors such as legal and environmental conditions. Buyer power, substitutes and rivalry are industry-level forces from Porter's Five Forces model, not macro-environment components.
- ABargaining power of buyers
- BThreat of substitute products
- CChanges in environmental protection laws affecting all industriesCorrect
- DRivalry among existing competitors
Explanation
PESTEL scans broad macro-environment factors (political, economic, social, technological, environmental, legal) that affect all industries. Changes in environmental protection laws are an environmental/legal factor. The other three options are industry-level forces in Porter's Five Forces model, so they are not PESTEL components.
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