Drill 3 ·
PESTEL and the Business Environment is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.
A boutique fitness business classifies six recent external changes using the PESTEL framework; uses an invented company and original factors.
Brindleford Fitness runs two boutique workout studios. Before its annual planning meeting, the owner lists six recent changes in the world around the business and wants to sort them using the PESTEL framework (Political, Economic, Social, Technological, Environmental, Legal).
External changes Brindleford is tracking
| # | External change |
|---|---|
| 1 | Interest rates rise, making the studio's loan payments more expensive |
| 2 | A new city ordinance requires all gyms to post calorie information on cafe menus |
| 3 | A popular fitness-tracking app lets members book classes from their phones |
| 4 | More local adults adopt a health-conscious lifestyle and seek group classes |
| 5 | A prolonged drought makes water conservation a major operating concern for businesses with showers |
| 6 | The city council debates a tax on sugary drinks sold at fitness cafes |
Question 1. Reading the list, which numbered change is a Technological factor?
Explanation: The correct choice is Change 3 (D): a fitness-tracking app that lets members book classes is new technology changing how the business operates, which is a Technological factor. Change 1 (A) is Economic, change 2 (B) is Legal, and change 4 (C) is Social, so none of those fits the Technological category.
Question 2. In the PESTEL framework, what do the two letters 'E' stand for?
Explanation: The correct pair is Economic and Environmental (A). PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal, so the two E's are Economic and Environmental. Ethical (B), Educational (C), and External (D) are not categories in the framework.
Question 3. How many of the six changes are best classified as either Political or Legal factors?
Explanation: The answer is Two (B). Change 2 (a city ordinance requiring calorie posting) is a Legal factor, and change 6 (the council debating a tax on sugary drinks) is a Political factor, giving two items. Change 1 is Economic, change 3 is Technological, change 4 is Social, and change 5 (the drought-driven water conservation concern) is Environmental, so none of those add to the count.
Question 4. Change 5 is the drought-driven water-conservation concern. Why is this best classified as an Environmental factor rather than an Economic one?
Explanation: The correct choice is that it arises from a natural-resource concern the studio must operate within (C). Environmental factors in PESTEL involve natural resources, climate, and sustainability, and a drought making water conservation a concern is exactly that. It does not change the studio's interest rate (A, which would be Economic) or its trainers' wages (B, an internal cost decision), and it does not set competitors' prices (D).
Question 5. The owner wants to know which single change will most directly raise the studio's near-term costs. Which change is that, and why?
Explanation: The correct choice is Change 1 (D). Higher interest rates directly raise the cost of the studio's existing loan payments, an immediate near-term cost increase. Change 4 (A) is a Social trend that could raise demand, not a direct cost increase, and it does not reduce expenses. A booking app (B) may shift some costs but does not eliminate all staffing costs. The sugary-drink tax in change 6 (C) is only being debated and has nothing to do with loan payments, so it has not raised any cost yet.