What is PESTEL Analysis and How it can be used for Salomon and the Treasury Securities Auction Case

Study?
PESTEL Analysis is a strategic management tool that "Salomon Meriwether's" strategy makers can use to
analyze internal and external factors that impact the situations in Salomon and the Treasury Securities
Auction . PESTEL stands for – Political, Social, Economic, Technological, Environmental and Legal factors
that impact the macro environment of the enterprise that it operates in.
Salomon Meriwether's operates in a dynamic environment where it is influenced by – consumer spending
behavior, collective social trends, increasing regulatory framework for environmental factors, increasing
environmental activism among consumers, technological changes, regulatory framework, government
decisions, and ever evolving legal system.
Case Study Overview
Set in June 1991, two months prior to Salomon Brothers' announcement that the firm had violated the
Treasury Department's rules governing the auctions of new Treasury securities. Salomon Vice Chairman
John Meriwether must decide how to address problems that continue to appear in the management of
the firm's government bond trading activities. In April 1991, one of his managers admitted that he had
submitted an illegal auction bid in February 1991. Now, one month later, there is mounting speculation in
the press that Salomon tried to corner the market for May 2-year notes. Structured to allow students to
analyze the ethical, legal and managerial dimensions of John Meriwether's situation. Background
information about the history of Salomon Brothers and the investment banking industry, the markets for
government securities, and the regulation of securities dealers and brokers is interwoven with
Meriwether's story. Accessible to individuals with and without experience in investment banking.

Salomon and the Treasury Securities Auction PESTEL / PEST Analysis

WHAT ARE POLITICAL FACTORS IN PESTEL ANALYSIS?

Political factors are often related to the level of intervention and nature of intervention of the local and
national government in the business and economic environment. Government policies and governance
system plays a huge role in nature and objectives of the policies.
Political Factors that Impact Salomon and the Treasury Securities Auction
- Other stakeholders such as non-government organizations, protest & pressure groups, activist
movements play critical role in policy making in Finance & Accounting. Salomon Meriwether's should
closely collaborate with these organizations so that it can contribute better to the community goals as
well as with corporate goals.
- Political stability in the existing markets – Salomon Meriwether's operates in numerous countries so it
has to make policies each country based on the Finance & Accounting industry specific requirements.
Given the recent rise in populism across the world I believe that Salomon Meriwether's can see similar
trends and may lead to greater instability in its existing markets.
- Changing policies with new government – We can make an inference after reading the Salomon and the
Treasury Securities Auction that there can be a transition of government in near future in most prominent
market. Salomon Meriwether's has to prepare for this eventuality as it can lead to change of priorities for
the sector.
- Taxation policies – Over the last two decades Salomon Meriwether's has benefitted from lower taxation
policies throughout the western hemisphere. It has resulted in high profits and increasing spending in the
research and development. In the second half Dwight B. Crane, Patrick Moreton believe that it can change
- Government resource allocation and time scale – Based on the data in the Salomon and the Treasury
Securities Auction it is difficult to infer that there will be change in resource allocations.
- Armed Conflict – Based on the evidences provided in Salomon and the Treasury Securities Auction case
study, there is very little change of armed conflict impacting Salomon Meriwether's business.

WHAT ARE ECONOMIC FACTORS?

Economic factors includes – economic performance of countryname, exchange rate, labor market
conditions , interest rate, the stage of economy of countryname, taxation rate, inflation rate, consumer
disposable income etc.
Economic Factors that Impact "Salomon and the Treasury Securities Auction" PESTEL Analysis
- Exchange rate – Based on the data in Salomon and the Treasury Securities Auction , the volatile exchange
rate can impact Salomon Meriwether's investment plans not only in the short term but also in the long
run.
- Government intervention in the Finance & Accounting sector can impact the fortunes of the Salomon
Meriwether's and its competitors.
- Efficiency of financial markets – Salomon Meriwether's can access vibrant financial markets and easy
availability of liquidity in the equity market to expand further globally.
- Economic Performance of Salomon Meriwether's – I believe the economic performance of the markets
that the firm is present in - grow above 9-10% because of increasing government expenditure, increasing
disposable income, and increasing investment into the sector.
- Inflation rate – The easy liquidity in the market post the great recession of 2018 will lead to increasing
inflation in the Salomon Meriwether's markets. It can impact the Salomon Meriwether'sconsumers
- Increasing liberalization of trade policy can help Salomon Meriwether's to invest further into the regions
which are so far offlimits to the firm.

WHAT ARE SOCIAL FACTORS?

Each society and culture has its own way of doing business. These social factors can not only help
companies like "Salomon Meriwether's" to better understand the way of doing business but also in
understanding the customer preferences in the market it operates in. Social factors include –
demographics, attitude towards certain products and services, health & safety attitudes, societal roles and
norms, acceptance of entrepreneurial spirit, gender roles, traditions, culture, and leisure interests.
Social Factors that Impact Salomon and the Treasury Securities Auction Case Study Solution
- Power structure – There is an increasing trend of income inequality in Salomon Meriwether's's most
prominent market. This has altered the power structure that has been persistent in the society for over
last 6-7 decades.
- Migration – The broader attitude towards migration is negative in the market Salomon Meriwether's is
present. This can impact Salomon Meriwether's ability to bring international talent to manage operations
in the country.
- Leisure interests – the customers that Salomon Meriwether's targets give a very high preferences to
experiential products and services. The firm needs to spend more energy to meet the preferences and
expectations.
- Societal norms and hierarchy – the society as portrayed in the Salomon and the Treasury Securities
Auction case study is different from the home market of Salomon Meriwether's. It should strive to build a
local team that understands the societal norms and attitudes better to serve the customers
- Attitude towards health and safety – With increasing liberalization the attitude towards health and safety
are getting lax. Salomon Meriwether's needs to stay away from these attitudes as the cost of failure is too
high.
- Education level – The education level is high in the Salomon Meriwether's existing markets. Based on
evidences in Salomon and the Treasury Securities Auction case study, you can suggest building a R&D
center in the local market

WHAT ARE TECHNOLOGICAL FACTORS IN PESTEL ANALYSIS?

Technology is fast disrupting various industries and Finance & Accounting is no different. Some of the
technological factors that are impacting the firm are– access to mobile phones driving empowerment, rate
of technology driven change, innovation in customer services, supply chain disruption because of
technology, nnovation in product offerings, access to greater information, population access to technology
etc.
Technological Factors that Impact Salomon and the Treasury Securities Auction PESTEL Analysis
- Technology transfer and licensing issues for Salomon Meriwether's – In the Crisis management, Ethics,
Financial markets, Negotiations, Regulation sphere there is no strong culture of technology transfer and
companies often are reluctant to transfer or license technologies for the fear of creating competitors out
of collaborators.
- Technological innovation is fast disrupting the supply chain model of Salomon Meriwether's as it is
providing greater access to information to channel partners, leading to higher profit sharing.
- Lowering cost of production – The latest technology is fast lowering production and servicing cost in the
Finance & Accounting sector. Salomon Meriwether's has to restructure its supply chain to bring in more
flexibility to meet both customer needs and cost structures.
- Research and development investment at both macro level and micro level in Finance & Accounting is
increasing. It can lead to industrywide disruption through innovation of new products & services.
- Empowerment of supply chain partners – Technology has shortened the product life cycle and it has
enabled suppliers to quickly develop new products. This has put pressure on Salomon Meriwether's
marketing department to keep the suppliers happy by promoting diverse range of products. It has added
to the cost of operations of the Salomon Meriwether's.
- Developments and dissemination of mobile technology has transformed customer expectations in the
Finance & Accounting sector. Salomon Meriwether's has to not only meet and manage these expectations
but also have to innovate to stay ahead of the competition.

WHAT ARE ENVIRONMENTAL FACTORS IN PESTEL ANALYSIS?

Over the last decade sustainability and environmental factors are becoming critical for businesses.
Government and pressure groups are fast asking organizations to adhere to environmental standards.
Some of the environmental factors are – limiting carbon footprints, increasing focus on sustainability,
climate change, safe disposal of hazardous material, insurance policies, laws regulating pollution, safe
water treatment, safe waste disposal etc.
Environmental Factors that Impact Salomon and the Treasury Securities Auction PESTEL Analysis
- Paris Climate Agreement has put real targets for the national governments. This can result in greater
scrutiny of environmental standards for Salomon Meriwether's in both developed and emerging markets.
- Recycling is fast emerging as a norm rather than a -good thing to do- in many economies. Salomon
Meriwether's has to make plans to adhere to regulations and meet consumer expectations in the Finance
& Accounting sector.
- Environmental norms are also altering the priorities of product innovation. In many cases products are
designed based on environmental standards and expectations rather than catering to traditional value
propositions.
- Extreme weather is also adding to the cost of operations of the Salomon Meriwether's as it has to invest
in making its supply chain more flexible.
- Regular scrutiny by environmental agencies is also adding to the cost of operations of the Salomon
Meriwether's.
- Waste management especially for units close to the urban cities has taken increasing importance for
players such as Salomon Meriwether's. Government are fast coming up with strict norms for waste
management in the urban areas.

WHAT ARE LEGAL FACTORS IN PESTEL ANALYSIS?

Legal plays a critical role in any country. Salomon Meriwether's management has to consider following
legal factors before entering international market – system of justice, time taken to deliver justice,
discrimination laws, data protection laws, copyrights law, intellectual property rights protection,
biasedness toward home players etc.
Legal Factors that Impact Salomon and the Treasury Securities Auction PESTEL Analysis
- Business Laws – The business laws procedure that government follows. Are these norms consistent with
international institutions such as World Trading Organization, European Union etc.
- Legal protection of intellectual property, patents, copyrights, and other IPR rights in various countries.
How Salomon Meriwether's will be impacted if there is not enough protection.
- Time take for business cases in court – some countries even though follow international norms but the
time for resolution often run in years. Salomon Meriwether's has to carefully consider average time of
specific cases before entering an international market.
- Environment Laws and guides – The level of environmental laws in the country and what Salomon
Meriwether's needs to do to meet those laws and regulations.
- Employment law in the country and how they are impacting the business model of the Finance &
Accounting sector. Can these conditions be replicated or bettered in international market?
- Data protection laws – Over the last decade data protection has emerged as critical part of not only
privacy issues but also intellectual property rights. Salomon Meriwether's has to consider whether the
country have a robust legal and technological mechanism to protect against data breaches or not.

What is the PESTEL Analysis Framework and How to Conduct PESTEL Analysis for Salomon and the
Treasury Securities Auction
You can refer the PESTEL analysis above of Salomon and the Treasury Securities Auction to conduct the
PESTEL analysis for the case study or for the company you like to. You can use all the six factors - Political,
Economic, Social, Technological, Environmental and Legal to conduct the PESTEL Analysis. If you want to
conduct PEST Analysis then just use the four factors - Political, Economic, Social, and Technological.

What is the difference between PESTEL and Porter Five Forces Analysis of Salomon and the Treasury
Securities Auction
PESTEL, a complementary tool to Porter Five Forces Analysis, expands on the analysis of external context
by looking in detail at specific types of issues that frequently have an impact on implementation of project/
initiatives.