PESTEL FACTORS

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Question
Citing at least one of each of the PESTEL factors, discuss the implications of each factors to business startup or operation.

The ever-dynamic nature of the business environment coupled by political, economic, social, technological, environmental and legal factors (PESTEL) have contributed to a number of implications to business startup and or operation. Miller (1997) noted that, PESTLE is a strategic framework for understanding external influences on a business. The central thesis of this essay is to cite at least one of each of the PESTEL factors, discussing the implications of each of the factors to business startup or operation.

Firstly, Political factors assess that, the country risk rating will remain high because of the just ended elections. The new government has indicated its intention to pursue empowerment programs across all sectors of the economy and the gazetted Indigenization Regulations aimed at attaining that objective. The timing of the implementation of the regulations when there is no money in the market to recapitalize companies, or to fund the purchase of equity under the program; the indiscriminate targeting of foreign investors on a racial criteria irrespective of whether or not such investors contributed to, or benefited to the impoverishment of Zimbabweans prior to independence, and the preoccupation with majority ownership by indigenous Zimbabweans to the exclusion of other modes of empowerment that do not necessarily require equity participation, has raised fears of expropriation of private property. Alexander (1991) added that, although empowerment concepts may appear noble and grand on paper, past experience has characterized the implementation of similar programs with violence, acts of expropriation and clashes between civic society and the State. The new government is likely to perpetuate the polarization of the Zimbabwean society along political lines through it indigenization, with possibilities of violence with impact negatively on business continuity. Consequently, businesses requires regular review their strategic plan as the political situation unfolds and in light of the prevailing economic environment.

Further, Economic factors in terms of Fiscal and Monetary Policy shifts are expected as the economy continue the search for a working formula. The economic situation is characterized by high tax regime is likely to persist as the government seeks to generate revenue. Short term survival driven economic policies are likely to perpetuate the marginalization of the poor. Low remuneration for employees could lead into labour unrest. The informal sector is likely to collapse as arbitrage opportunities that were created by hyperinflation disappear. In the short to medium term, the economy is most likely going to be characterized by limited liquidity, short term investor

sentiment, high consumptive expenditure with focus on food and other consumables, influx of cheap imported goods, and further strain on the productive sectors of the economy. Also the country does not have its own currency. All commercial activity is conducted in United States Dollars while our Central Bank, The Reserve Bank of Zimbabwe (RBZ) does not have rights to print the currency nor does it have any capacity to supply cash. The cash in circulation is being imported and exported (soiled notes) at a cost. Kaplan and Norton (1996) postulated that, the cost of importing and exporting (soiled notes) small denomination notes is high. Consequently, there is a shortage of change on cash transactions. This shortage of change tends to push prices up as merchants round off the prices of goods and services to the nearest higher denomination. This scenario paints great potential and opportunities for plastic money which puts Steward bank in particular at an advantage with its cash card product and recently lunched Eco-Cash. Socially, the national health situation will continue to be plagued by the HIV pandemic....
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