SQA Higher Business Practice Exam

The correct response is PESTLE analysis, which stands for Political, Economic, Social, Technological, Legal, and Environmental analysis. This term specifically refers to a framework used to evaluate the external factors that can impact an organization’s performance and strategic planning. By systematically examining these areas, businesses can gain insights into the broader market dynamics, identify potential opportunities and threats, and make informed strategic decisions.

Market research primarily focuses on gathering data about customers, competitors, and market trends, often emphasizing specific products or services rather than the broader external factors considered in PESTLE analysis. SWOT analysis is an internal assessment tool that evaluates an organization's Strengths, Weaknesses, Opportunities, and Threats, focusing more on internal capabilities and competitive positioning rather than external environmental factors. Competitive intelligence involves gathering and analyzing information about competitors’ strengths and weaknesses but does not encompass the wider range of external influences captured in a PESTLE analysis.

Thus, PESTLE analysis is the most comprehensive term for evaluating the external environment in business.