Today, oil and gas companies form a vital part of the global economy and contribute significantly towards the national GDP. However, there has been an increase in regulatory pressure for oil and gas companies, due to major environmental disasters that have taken place in the past. The recent increase in the adoption of renewable energy sources and the growing trend towards alternative energy sources are the major contributors that have cast a negative spotlight upon oil and gas companies. Such factors coupled with the rise in governmental and pro-eco legislation pressure have made it challenging for leading oil and gas companies to stabilize their presence in the global market.
Therefore, to ensure a stable market position and reduce business threats, companies in the oil and gas industry are approaching companies like Infiniti Research to leverage their expertise in offering PESTEL analysis solution. With PESTEL analysis, companies can examine several political, economical, social, technological, legal, and environmental factors to gain valuable advantages.
Business Challenge
The client is a leading oil and gas company based out of Central Europe. As the global business environment kept changing, the client realized the need for an effective mechanism to determine the risks and opportunities associated with the market. Moreover, rising environmental regulations were making it too expensive for the company to conduct business in specific areas. Therefore, the client wanted to determine how the current regulations would impact their business model and how sensitive their business is to changes in tax policies. Also, by leveraging Infiniti’s PESTEL analysis solution, the client wanted to understand how evolving technologies would affect their potential consumer base and they also wanted to anticipate future difficulties to minimize the effects.
Solutions Offered
The experts at Infiniti Research analyzed all the macro-environment factors that impacted the client. The factors including political, economic, social, technological, legal, and external environment of the company were evaluated.
With Infiniti’s PESTEL analysis solution, the client was able to make use of profitable opportunities and anticipate all the future difficulties. The PESTEL analysis supported strategic management by identifying the external factors that presented data on opportunities or threats, based on the remote or macro-environment of the business, pertaining to the political, economic, sociocultural, technological, legal, and ecological factors. Analyzing the key threats further helped the company circumvent various issues. This subsequently helped the client to spot better business opportunities.
Analyzing the effective external factors also helped the company to plan a way to scale its growth, ensure cost-effective production levels, and understand when major shifts in technology are likely to occur. Moreover, the in-depth insights obtained from this PESTEL analysis engagement proved to be valuable in making smart and prudent business decisions.
What is PESTEL analysis?
Every organization operates in a complex, dynamic environment that is affected by multiple, ever-shifting forces, trends, and challenges. Therefore, developing a PESTEL framework for monitoring and responding to the external environment is an effective strategy to overcome market challenges. A PESTEL analysis is centered around the political, economic, social and technological, environmental, and legal factors of a business. The goal of a PESTEL analysis is to develop a profound understanding of the external environment where the organization operates. Businesses that strongly monitor and respond to changes in the macro-environment are able to differentiate themselves from the competition and build a competitive advantage.
Political: Examining how the political environment influence business development and growth.
Economic: Analyzing changes in interest rates, taxes, stock market, and other economic metrics.
Social: Having detailed insights into the changes in lifestyles, advertising targets, ethics, demographics, and culture.
Technology: Evaluating the technological advancements occurring in the industry.
Environment: Identifying the environmental factors that should be considered.
Legal: Anticipating any new laws and regulations that can impact the operations.
Advantages and Disadvantages of PESTEL Analysis
PESTEL analysis helps businesses identify potential threats and opportunities in the market. Let’s discuss some of the advantages and disadvantages of PESTEL analysis.
Advantages
- Help reduce potential threats affecting the organization
- Provides a simple framework for macro-environment analysis
- Helps in the development of strategic thinking with the organization
- Enables easy entry to new markets, both globally and nationally
Disadvantages
- External factors keep changing rapidly.
- PESTEL analysis needs varied perspectives and point of views
- Gaining access to external data involves a cumbersome process
- The results from PESTEL analysis are highly subjective and the interpretations vary from individual to individual.
