What are ecological factors in the PESTEL framework?
The ecology component of the PESTEL framework relates to the broader natural environment that firms operate within. This environment can have a significant impact on the operations of the firm – potentially causing large disruption to the operations of the companies. Considering the ecological component in the PESTEL framework can help ensure that firms are prepared for the potential impact of ecological changes on their firm and supply chain.
Examples of ecological factors that impact businesses
Natural disasters
One of the most direct ways that firms can be impacted by the natural environment in which they operate is by natural disasters. Floods, tornados, and other major weather events can significantly disrupt supply chains and the operations of companies. Even natural disasters that occur in a different part of the world can have knock-on consequences, either to the direct suppliers to a firm or potentially firms that supply to other companies that a firm buys from. It is important to be aware of the possibility that such events can have on the overall supply chain of a company.
Climate change
Beyond natural disasters, climate change more broadly can impact firms. While climate change is gradual in nature, being aware of the broad changing conditions can help ensure that firms are prepared for increasing frequency of extreme weather events.
Limited availability of natural resources
Companies can also be impacted by limited availability of natural resources. Particularly in industries where there is a finite and declining source of such resources being aware of the long-term availability of materials is important.
Pandemics
A final source of ecological factors that may impact firms is global pandemics. This possibility has taken a new relevance since Covid-19 – an event that has had a profound and lasting impact on firms. Being aware of the broad impact that pandemics can have is important for companies. The global pandemic in 2020-21, for example, had significant impacts to supply chains, working arrangements, and the ability for physical stores to open.
The growing social awareness of environmental stewardship
It is also important for firms to be aware of societal changes and changing attitudes. While not strictly an ecological component of the macro-environment (rather a social change), the growing social awareness of the impact of firms on the environment, and the importance placed by customers on corporate social responsibility, is another important macro change for firms to be aware of.
Related Articles
