PESTEL Analysis PESTEL analysis is an important and widely used tool for understanding the big picture of a company's external environment. PESTEL is the acronym for the political, economic, socio-cultural, environmental and legal environment in which a company operates. The advantages of PESTEL analysis are that it helps to identify the potential environmental influence, helps to better understand the existing opportunities and threats, and helps to understand the growth and decline of the market. Political The political environment has an influence on business. Political factors must be considered when looking at the external environment. According to Binstock, “Clorox is voluntarily converting its plants in the United States to safer chemical processes to protect against disasters and terrorism” (2010). More than 200 chemical plants in the United States have converted to safer chemical processes. The same article states that in 2006, Congress passed a temporary law that prevents the government from requiring disaster prevention. This is good publicity for the company and puts it ahead of its competitors if the government ever implements disaster prevention laws. EconomicEconomic factors are important to Clorox because these factors influence the company's profits. Clorox's main economic concern appears to be the rising cost of raw materials. “Significant increases in energy and transportation costs, including the cost of diesel, or major raw materials, including, but not limited to, resin, chlor-alkali, sodium hypochlorite, corrugated cardboard, agricultural products and other raw materials ” (Clorox, 2010). An increase in the price of raw materials could force the company to increase prices to continue making a profit. A struggling economy could reduce consumer spending. “Sales were $1.27 billion, down 2.8% from the same quarter a year ago” (Avalos, 2010). Socio-cultural Today's consumers are very environmentally conscious. The company takes advantage of this by producing environmentally friendly products. The company increased its profits through sales of the Green Works product line. According to an article in the San Francisco Chronicle “…research says Green Works accounts for about half of the $100 million annual market for eco-cleaners” (Said, 2010). Customers like a company that gives back to the community. Clorox does this through the Clorox Foundation.” The mission of the Clorox Company Foundation is to improve the quality of life in the communities where Clorox employees live and work” (Clorox, 2011). TechnologicalTechnological factors play an important role in the opportunities a company faces. “The Company has outsourced a significant portion of its computing operations to Hewlett-Packard, including its data centers, which are primarily located in Alpharetta, Georgia.