Provide in-text citations and APA 7 references with DOI numbers not older than 3 years to support the information below

The PESTEL analysis is a strategic management tool used to examine the external macro-environmental factors that can influence an organization's operations and decision-making. It provides a structured framework for assessing the political, economic, social, technological, environmental, and legal aspects of the business environment.

Explanation: By understanding these factors, companies can identify potential opportunities and threats that may arise from changes in the broader context, helping them make informed strategic choices.

1. Political Factors: This dimension considers the impact of government policies, regulations, and stability on businesses. Political factors include tax policies, trade tariffs, labor laws, political stability, and government ideologies. For instance, changes in import-export regulations can affect international businesses, while unstable political environments may increase operational risks.

2. Economic Factors: This aspect assesses the economic conditions, such as GDP growth, inflation rates, exchange rates, and interest rates. Economic factors directly impact consumer purchasing power and business investments. For example, during a recession, consumers might reduce their spending, influencing businesses to adjust their pricing and marketing strategies.

3. Social Factors: Social factors analyze the demographics, cultural trends, lifestyle preferences, and consumer behavior. Companies must consider factors like population growth, age distribution, and social attitudes to align their products and services with target customers' preferences.

4. Technological Factors: This dimension focuses on technological advancements and their influence on industries and markets. Technological factors include research and development activity, automation, and the rate of technological obsolescence. Businesses must adapt to technological changes to remain competitive and meet evolving consumer demands.

5. Environmental Factors: Environmental factors involve the impact of ecological aspects on business operations. These factors include sustainability concerns, climate change, environmental regulations, and resource scarcity. Organizations are increasingly required to consider their environmental impact and adopt sustainable practices.

6. Legal Factors: Legal factors encompass laws and regulations that affect business operations, such as employment laws, product safety standards, and intellectual property rights. Complying with legal requirements is essential for businesses to avoid potential legal and reputational risks.

Illustration: The chosen scholarly illustration is the study conducted by Johnson and Smith (2019) on the international expansion strategies of pharmaceutical firms. The authors used a PESTEL analysis to investigate how political and regulatory factors influenced market entry strategies in different countries.

Explanation: By examining the political climate and regulatory requirements in each region, the study revealed that multinational pharmaceutical companies adapted their entry modes and investment decisions accordingly. For instance, in countries with strict regulatory frameworks, firms preferred forming strategic alliances with local partners to navigate the complex approval processes and gain market access. On the other hand, in regions with more favorable political climates, companies opted for direct investments and wholly-owned subsidiaries to establish a strong presence.

Rationale: The rationale for choosing this illustration lies in its relevance and recent publication. It highlights the practical application of the PESTEL analysis, specifically in the pharmaceutical industry's context. The research emphasizes that understanding political and regulatory factors is crucial for firms operating in a heavily regulated industry like pharmaceuticals. By conducting a PESTEL analysis, the study demonstrates how organizations can tailor their strategies to suit specific country contexts, ensuring successful international expansions. Moreover, the fact that this study was published in a reputable peer-reviewed journal adds to its credibility and academic rigor. As businesses face an ever-changing global environment, the PESTEL analysis continues to be a valuable tool for strategic decision-making, making this illustration highly relevant and informative for practitioners and scholars alike.