Question

Essay Question: Sunnie Day is the CEO of a company, based in Enterprise, OR, that makes an innovative new kind of energy bar (The Energy Log). Based on your PESTEL analysis what are the top 2 or 3 environmental factors that Sunnie needs to be very aware of? How could they affect her business? What could she do to minimize the effect or maximize the opportunity?

Answer 1

PESTLE analysis is a tool that helps in analyzing the business's external environment by analyzing the business opportunity on the parameters of Political, Economic, Social, Technological, Legal, and Environmental conditions of the place where we intend to do the business. If we look at the two environmental factors which Sunnie needs to be aware of and their impact and impact minimization to maximize the opportunity are as below:

a. Availability of raw materials: The raw material availability will depends on the environmental factors and their continuous supply is necessary for the business continuity. There could be impacts such as changes in prices of the raw material due to scarcity of supplies may lead to a loss in business as well as a decrease in profitability. In order to minimize this impact, a careful analysis of the environmental condition and entry into the long term agreement of supply of material needs to be done. If there are any factors which hint the disruption in supply

b. Environmental regulations: There could be some environmental regulations that might either limit the level of production or level of raw materials supply therefore all the rules and regulations which are present in the area should be studied well. If there are some limitation then the same should be analyzed before making the investment in terms of size and capacity of the production unit. The optimized level of production as per the allowed rules and regulations while meeting the compliance will help in making the optimum investment and return on capital would be maximized.