PESTEL or PESTEL is an abbreviation for Political, Economic, Social, Technological, Environmental and Legal. It is actually analysis of macro environment situation. It provides knowledge regarding the factors that are not directly affecting the business but indirectly influencing decisions.
The political factors become a source of growth for an organization when they create favorable conditions for a business entity. On the other hand, when the political environment of a country is hostile and not supportive for business growth, generating high level of the sales and revenue becomes a challenging task for an organization. YouTube is a product owned by Google that is significantly affected by the political climate of a country. Along with that, the policies devised by the government about the display of content through information sharing and online streaming portals such as YouTube can also limit the revenues of the company. For instance, the display of offensive content has resulted in the blockage of YouTube in some regions of the world, which has resulted in losses for the organization (Hook & Bokhari, 2015). Another area where the interplay between political component and YouTube seems apparent is the way YouTube is used as one of the social media tools for reaching the masses during political campaigns and influencing the political opinion and engagement of the public (McKinney & Rill, 2009).
The economic forces of a domestic as well as international market shape the business growth prospects of an organization or an industry. The income of the people drives the use of internet and the purchase of internet packages. A downward trend in the economy leads to selection of internet packages that cover the necessary internet use, in such a case, the use of YouTube may be negatively affected as people may reduce the internet use for the purpose of entertainment. Recession doesn’t directly affect the profitability of the organization as it is not a manufacturer of any tangible product, however the buying behavior of the population changes, which has an impact on the consumption of internet. Another aspect of company operations that is adversely affected due to economic turbulence is the frequency of advertisements that displayed on its social media portal. The budget allocated for advertising is adjusted according to the economic robustness of a company and the advertisement expenditure may be reduced to manage the cost of operations, thus reducing the profits that YouTube generates through advertisement (Google Inc., 2014). On the other hand, economic stability carried positive implications for YouTube as the company can gain benefit from the increased number of people from the population that become users of internet. The economic stability also brings in significant amount of profits in the domain of advertising as the companies seek to market their product through running the commercials on YouTube.
The variations in culture formulate an important part of YouTube as it’s a global brand, accessible to different people in various countries. The socially diverse workforce of the organization also indicates the way socio-cultural component can be a challenge for the organization. The content displayed on YouTube needs to be in accordance to the taste and preference of the viewers. The advertisements are also made in accordance to the preference of the target population. YouTube as a part of social networking domain offers video sharing platform to the people, which is regulated as per the needs of the people. As noted earlier, YouTube has been used to influence the public in case of political orientation; a similar effect of the video sharing platform can be seen in the use of YouTube for managing social perception of the public.
YouTube is a subsidiary managed by Google Inc. that serves as a dominant means of sharing of online content among users of internet. The management of YouTube operations is significantly dependent on the integration of high end technology that provides people with the quality experience. Google Inc. (2014) reflects the use of modern form of technology to make sure that YouTube is able to tackle the competitive pressure from its rival companies that are engaged in the regulation of video sharing platforms and social networking websites. New forms of technologies keep on emerging and it is necessary for a business to recognize the technological advancements happening in the industry and take required measures to be a part of the technological development and growth.
Technology can be used to develop new forms of products as well as enhance the functions and features of the existing products. In case of YouTube, the use of technology can help in improving the quality of video sharing experience for the users as well as offering them greater degree of connectivity and ability to access the platform through various gadgets. For instance, the improvements made in video technology can be attributed to the inclusion of HTML5 which offers the people ease of viewing the video content on their devices (Lardinois, 2015). The speed with which a video can be uploaded on the platform gains support through the high quality technology put in place by the management to facilitate its customers.
Ecological and environmental protection has gained a special focus by various organizations as the governments and general public stress the importance of environment protection and community support from the corporations. As mentioned before, YouTube is being operated by the parent company Google Inc. The socially responsible business practices of Google are also reflected in the management and operations of YouTube. For instance the focus on clean energy and effort to protect the environment has been embraced by YouTube as well. Google is using YouTube for spreading the message of its environment protection policy to the public.
The domain of online video sharing is exposed to the legal components of copyright laws and intellectual property regulations. Since YouTube is a video sharing set up which can be used by the public, there is a possibility that the members will end up loading the content that is a violation of copyright laws. In such cases, the management has to take swift action by removal of the content. Another area where Google has to deal with legal matters pertaining to its subsidiary is the illegal download of content (Google Inc., 2014). The telecommunication companies and government can also place law based restrictions on YouTube.
Google Inc. (2014). Form 10-K. Retrieved from https://investor.google.com/pdf/20141231_google_10K.pdf
Hook, L. & Bokhari, F. (2015). Pakistan lifts 3-year ban on YouTube. Financial Times. Retrieved from http://www.ft.com/intl/cms/s/0/b878b146-be09-11e5-9fdb-87b8d15baec2.html#axzz3yWkQI5ra
Lardinois, F. (2015, January 27). YouTube Now Streams HTML5 Video By Default. Tech Crunch. Retrieved from http://techcrunch.com/2015/01/27/youtube-goes-html5-flash-is-now-deader/
McKinney, M. S., & Rill, L. A. (2009). Not your parents’ presidential debates: Examining the effects of the CNN/YouTube debates on young citizens’ civic engagement. Communication Studies, 60(4), 392-406.