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The PESTEL framework consists of various factors that can affect companies and how well they are competing in the marketplace

February 14, 2019 0 Comment

The PESTEL framework consists of various factors that can affect companies and how well they are competing in the marketplace. Some of these factors allow a company to gain a competitive advantage while others may be indicators that there are issues the business needs to resolve. This model encompasses the following factors: Political, Economic, Sociocultural, Technological, Ecological, and Legal. All of these factors deal with external components that could affect a company much like an outside influence.
Whirlpool Corporation is headquartered in Bent Harbor, Michigan and subject to the laws and regulations that the United States government implements. This political influence affects the decisions that the company makes and the behaviors that it has. In the case of Whirlpool, they are one of the largest, leading manufacturer of home appliances in the world. Since their homebase is in the US, the risk of a political factor such as war is low whereas tariffs and taxes could potentially be a high risk factor for Whirlpool with the introduction of new laws.
With the introduction of President Donald Trump’s new tax cut for businesses, the corporate tax rate was cut from 35%-21% beginning in the year 2018 (cite). This new act would allow Whirlpool to not pay out as much taxes, therefore increasing their net income on the books. Overall in 2017, Whirlpool’s net global sales was 21 billion US dollars. This total has the possibility of increasing due to Trump’s new law and the fact that 54% of sales take place within North America (cite).
The economy also plays a lead role in the development of a company. Considering Whirlpool’s global presence, some of these economic factors expand beyond the five that Frank Rothaermel explain in his book, Strategic Management. According to Rothaermel, growth rates, levels of employment, interest rates, price stability (inflation and deflation), and currency exchange rates are key economic factors in affecting a firm’s external environment (cite). Each of these carry their own weight in affecting a company, and Whirlpool is no exception.
Whirlpool Corporation is a global company, as stated before, and has four sales market segments in which they sell a wide array of products–North America, EMEA (Europe, Middle East, and Africa), Latin America, and Asia (cite). As for growth rates, the top market segment for Whirlpool would be North America. Although the population is not as high as Asia’s and the goods and services produced there is barely considered a rival, this economy continues to dominate with 54% of sales being made here (cite). The economy will continue to grow and thrive here and eventually develop into a much more mature marketplace for Whirlpool.
Another important factor of these five is the currency exchange rate. Due to Whirlpool being a global company, this is a factor that could easily affect many aspects of the company’s overall portfolio. Brexit is one new political move that has the potential to negatively affect Whirlpool’s presence in their EMEA market segment. If Britain actually leaves this market, then this move has the potential to decrease the power of the Euro and cause great economic unrest among the European Union. The British Pound is such a key economic factor for the EU that Brexit could cause the European market to have a slight collapse (cite). Twenty-three percent of Whirlpool’s sales come from their EMEA market, and to say that the currency exchange factor will not be impacted and to not look at what needs to be done in order to sustain sales in the EMEA market once this change goes into effect would be a very wrong move on Whirlpool’s end.
The next level in the PESTEL framework model is the sociocultural aspect. This level attempts to understand the culture and values within a society. Considering the market segments Whirlpool already finds themselves in, it is not surprising that they have had to look at this level from every angle possible. The world is an ever-developing country, and technology is always quickly changing and becoming new and better. Whirlpool has combined these next two levels in the framework for a new idea they are releasing.
In 2017, Whirlpool acquired Yummly, an app that “recommends recipes based on ingredients consumers have on hand” (cite). With understanding that consumers in all of their markets are present and experiencing these new technological changes, it was a smart move by Whirlpool. According to Rothaermel, U.S. consumers are beginning to have more health conscious minds that should

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