PESTEL analysis of the USA (USA Country Profile) (2024)

PESTEL analysis of the USA (USA Country Profile)

By: Joe David | Tags: Global Business Issues

PESTEL analysis of the USA (USA Country Profile)

This PESTEL analysis of the USA aims to address some of the political, economic, social, technological, environmental, and legal issues concerning the USA. The United States of America (USA) is commonly known as the United States (U.S.). It is an economic and political superpower. In terms of nominal GDP, it is the largest economy in the world.

The USA contributed immensely to the founding and development of institutions such as the United Nations, World Bank, and international Monetary Fund. It is a highly developed country with a great reputation for its infrastructural and technological brilliance.

Political factors affecting the USA

The USA is the second largest democracy in the world. The president is the head of the country and is elected for a four-year term. Elections held in the USA are usually considered fair and transparent. The country enjoys a stable political climate, even though there have been some challenges recently. It also has an enormous influence over the political dynamics of many countries around the world. However, the USA faces international criticism for some of its interventionist policies in some parts of the world.

The USA advocates and promotes democracy around the world. With a stable political environment, advanced infrastructure, and technology, the USA positions itself as a great destination for foreign direct investment. Consequently, the country has been the first choice for many multinational companies for foreign direct investment for a long time. However, countries such as China, India, Brazil, Turkey, Nigeria, South Africa, and many others came forward as contenders for foreign direct investment.

Economic factors affecting the USA

The next element to discuss in the PESTEL analysis of the USA is the economic environment. The USA is the largest economy in the world in terms of nominal GDP. It is a country from where companies such as Coca Cola, McDonald’s, Subway, Microsoft, Apple, Facebook, Google, and many others are shaping and leading the socio-economic discussions of the world.

However, the global economic landscape is changing very rapidly which is a challenge for the USA. There is no doubt that the country is an economic superpower and world leader. However, it may turn out to be the 3rd in the global ranking by 2050 in terms of gross domestic product by purchasing power parity (Martin, 2017).

Some of the top exports of the USA are refined petroleum, crude petroleum, cars, integrated circuits, and vehicle parts that largely go to countries such as Canada Mexico, China, Japan, and Germany. Its top imports are computers, crude petroleum, broadcasting equipment, and packaged medicaments that mostly come from countries such as China, Mexico, Canada, Japan, and Germany (OEC, 2021).

The USA recovered from 2008/recession well. Unemployment fell and income levels improved. It is worth mentioning that that there was a widespread fear of a recession facing the US in late 2019 as the country’s stock markets had dropped sharply. Many analysts blamed US-China trade war, US-Iran standoff, Brexit, and geopolitical uncertainties for this.

The global lockdowns in 2020/21 caused havoc to the US economy. In fact, the economy shrank by 3.5% in 2020, the worst performance since the World War 2 (Rushe, 2021). Therefore, the Federal Reserve injected $2.3 trillion into the economy in early 2020 to deal with the financial challenges (Long, 2020).

Labour is not cheap in the USA, particularly when compared to that in China, India, and Mexico. Availability of cheap labour has encouraged many US firms to outsource many of their business activities around the world. However, this has angered many Americans.

Social factors affecting the USA

The USA is the third most populous country in the world with a total population of approximately 332 million (Worldometer, 2021). It sees one birth in every 8 seconds, and one death in every 11 seconds. It has a big aging population which can cause problems, particularly in the supply of labour. However, it is not in the top 20 list of aging population in the world.

The USA is a very diverse country. By 2020 almost 1 in 3 Americans were expected to have African, Asian, Latino, or Native American ancestry. The education system is one of the best in the world; so is the health care system. However, health care is not usually free and certainly not cheap for many people. Likewise, police violence, crime, and infant mortality rate are some other issues of grave concerns.

People are generally health conscious; however, fast food culture has contributed to obesity and other illnesses in the country. A majority of the population has a liberal mindset; however, the country witnessed racial tensions recently which reminded many of the troubled times the country went through by the end of the Second World War.

Socio economic mobility in the USA increased from 1950 to 1980; however, according to some studies, there has been a decline since 1980. Socioeconomic mobility refers to the upward or downward movement of people from one social class or economic level to another.

Technological factors affecting the USA

The next element to discuss in the PESTEL analysis of the USA is the technological environment. The USA is the global leader in science and technology. Americans have a longstanding fascination for technology, and companies such as Apple, Microsoft, Google, Facebook, and many others have addressed the technological needs of the Americans and the people around the world. And in doing so, they have become the global leaders in their respective field.

The USA has been at the forefront for adapting and applying technologies in a wide variety of fields. Technologies have changed the ways many things are done. Many jobs have been transferred from the USA to other countries and production facilities have been relocated. While this has helped companies reduce their production costs, it has also made many Americans upset.

The rate of technological innovation and change is extremely rapid in the USA. However, the country faces strong challenges from a number of countries e.g. China, South Korea, and India.

Environmental factors affecting the USA

The USA has an extremely diverse geography, climate, and wildlife. This diversity coupled with other factors such as breath-taking natural attractions, charming little towns, and vibrant cities has been a driving force to draw millions of tourists to the country. 79.26 million international visitors came to the U.S. in 2019 (Lock, 2021). Canada, Mexico, United Kingdom, Japan, Brazil, & China are the top six countries sending tourists to the USA.

However, the USA faces some of the toughest weather conditions in the world. The country has sustained over 220 weather and climate disasters since 1980. In 2017 alone, there were 15 weather and climate disasters with losses exceeding $1 billion each. Apart from financial damages, these disasters also cause disruption to everyday life in the most technologically developed country in the world.

Legal factors affecting the USA

Detailed discussion on the legal environment of the USA is beyond the scope of this article. However, the article addresses some of the key areas in brief. Each state in the USA has its own government structure and legal scheme. Businesses come under the regulatory environment of the state in which they operate. The country upholds equal treatment of nationals and foreigners. Expatriate employees can expect an unbiased trial from the judicial system. The USA also offers a strong legal system to protect Intellectual Property Rights.

We hope the article has helped you explore PESTEL analysis of the USA. Other relevant articles for you are:

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Last update date: 15 March 2021

Further reading/references

Lock, S. (2021) Number of inbound international visitors to the United States from 2011 to 2018 (in millions), available at: https://www.statista.com/statistics/214686/number-of-international-visitors-to-the-us/ (accessed 14 March 2021)

Long, H. (2020) The Federal Reserve has pumped $2.3 trillion into the U.S. economy. It’s just getting started, available at: https://www.washingtonpost.com/business/2020/04/29/federal-reserve-has-pumped-23-trillion-into-us-economy-its-just-getting-started/ (accessed 15 March 2021)

Martin, W. (2017) These will be the 32 most powerful economies in the world by 2050, available at http://www.independent.co.uk/news/business/these-will-be-the-32-most-powerful-economies-in-the-world-by-2050-a7587401.html (Accessed 12 November 2017)

OEC (2021) United States, available at: https://oec.world/en/profile/country/usa (accessed 14 March 2021)

Rushe, D. (2021) US economy shrank by 3.5% in 2020, the worst year since second world war, available at: https://www.theguardian.com/business/2021/jan/28/us-economy-shrank-2020-worst-year-since-second-world-war (accessed 15 March 2021)

Worldometer (2021) United States Population, available at: https://www.worldometers.info/world-population/us-population/ (accessed 15 March 2021)

PESTEL analysis of the USA (USA Country Profile) (1)

Author: Joe David

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

PESTEL analysis of the USA (USA Country Profile) (2024)

FAQs

How do you do a PESTLE analysis for a country? ›

How to do a PESTLE analysis
  1. Identify the scope of the research. ...
  2. Decide how the information will be collected and by whom. ...
  3. Identify appropriate sources of information. ...
  4. Gather the information – you can use the template below.
  5. Analyse the findings.
Dec 6, 2021

What is PESTLE analysis explain briefly? ›

A PESTLE analysis is a tool used to gain a macro picture of an industry environment. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors. It allows a company to form an impression of the factors that might impact a new business or industry.

What are the 6 PESTEL factors? ›

In particular, PESTEL reflects the names of the six segments of the general environment: (1) political, (2) economic, (3) social, (4) technological, (5) environmental, and (6) legal.

What is PESTEL analysis PDF? ›

A PESTEL analysis is a framework or tool used to analyse and monitor the external environment factors which have an impact on an organisation. The result of which is used to identify threats and weaknesses, strengths and opportunities which can be considered or used in a SWOT analysis.

What is the most important PESTEL factor? ›

There is no single most important factor in the PESTEL framework. Depending on the subject to be analyzed, different factors may be supportive or detrimental. There is something that is most important in strategy formulation - knowing your company, knowing your competition, and knowing your customer.

Does the culture of a country have an effect on the PESTEL analysis? ›

Q: Does the culture of a country have an effect on the PESTEL analysis? Ans: Yes, a culture of the market is an important factor of the macro environment.

Why PESTEL analysis is important? ›

A PESTLE analysis is a useful addition to the organisation's toolkit, because it gives a very precise and structured analysis of the external environment. This can be particularly helpful in identifying opportunities and threats to feed into a SWOT analysis.

What are the factors of PEST analysis? ›

Below we break down each of the 4 Factors of PEST – Political, Economic, Social, Technological.
...
Technological Factors
  • R&D Activity.
  • Automation.
  • Technological Incentives.
  • The rate of change in technology.
Feb 18, 2022

What is PEST give suitable examples? ›

Definition: PEST Analysis is a measurement tool which is used to assess markets for a particular product or a business at a given time frame. PEST stands for Political, Economic, Social, and Technological factors. Once these factors are analysed organisations can take better business decisions.

Are all six elements of Pestel important to every organization? ›

The PESTLE environment contains six key elements that can impact organizational activities. PESTLE analysis explains about Political, Economic, Sociological, Technological, Legal and Environmental factors and their impact to the business organizations. These elements are non-controllable to the organization.

What is social factors in PESTLE analysis? ›

Social factors include age distribution, population growth rate, employment levels, income statistics, education and career trends, and religious beliefs, as well as cultural and social conventions.

What are the different factors that a tourism business in today's situation should be included in the pestle framework? ›

PESTLE Analysis of the Tourism Industry
  • Open borders. Thanks to many governments' decisions to open up borders to foreigners, it's easier than ever to travel to new countries. ...
  • Government stability. ...
  • Tax incentives. ...
  • Rising disposable incomes. ...
  • Sharing economy. ...
  • Social pressures. ...
  • Racial acceptance. ...
  • Better transport.

What are the political factors? ›

Political factors involve the decisions and laws that governments make.
...
Political factors
  • tax.
  • laws.
  • political stability.

What is Google Scholar pestle? ›

A management strategy that has yet to be used in the literature is called PESTEL analysis. PESTEL is a framework that can be used to analyze how external political, economic, social, technological, environmental, and legal factors effect trail management (“Professional Academy”, 2018).

What is PESTLE analysis Slideshare? ›

A PESTLE analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis.

Who developed PESTEL analysis? ›

The PESTLE analysis was invented over 50 years ago by Francis Aguilar, who was an American scholar whose expertise was in strategic planning.

Why PESTEL analysis is importance for international business? ›

PESTEL analysis helps to understand the external factors in the strategic business environment. They are grouped into political, economic, social, technological, environmental, and legal factors. We will cover PESTEL and how it can help you plan and deliver your global expansion.

Why is PESTLE factors important for international business? ›

A PESTEL analysis helps managers gain a better understanding of the opportunities and threats they face; consequently, the analysis aids in building a better vision of the future business landscape and how the firm might compete profitably.

How PESTEL analysis can help companies to identify both threats and opportunities in the external environment? ›

PEST Analysis is useful for four main reasons: It enables you to spot business or personal opportunities, and gives you advanced warning of any significant threats. It reveals the direction of change within your business environment, so you can adapt what you're doing to work with the change, rather than against it.

Does the culture of a country have an effect on the PESTEL analysis? ›

Q: Does the culture of a country have an effect on the PESTEL analysis? Ans: Yes, a culture of the market is an important factor of the macro environment.

What are examples of PESTLE? ›

Examples of social factors PESTEL
  • Population size.
  • Population growth.
  • Life expectancy.
  • Age distribution.
  • Death rates.
  • Birth rates.
  • Equity distribution.
  • Income per capita.

How does PESTLE affect international business? ›

PESTEL analysis helps to understand the external factors in the strategic business environment. They are grouped into political, economic, social, technological, environmental, and legal factors. We will cover PESTEL and how it can help you plan and deliver your global expansion.

How do businesses use PESTLE analysis? ›

The traditional use of PESTLE in change management is as follows:
  1. Step 1 - List external PESTLE factors for the business. ...
  2. Step 2 - Identify the implications of each PESTLE factor on the business. ...
  3. Step 3 - Rate the impact and likelihood. ...
  4. Step 4 - Further action.
Oct 20, 2016

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