If the average middle-class income falls, which PESTEL factor is affected for Company B?

When the average middle-class income falls, the PESTEL factor that is primarily affected is the economic factor. This is because PESTEL analysis examines the external factors influencing a business, with economic factors specifically addressing the financial and economic environment in which a company operates. A decline in average income can lead to reduced consumer spending power, impacting demand for goods and services. Companies, including Company B, may see changes in sales, pricing strategies, and overall market conditions as a result.

This shift can affect consumer behavior, leading to a demand for lower-priced products or services, or prompting consumers to cut back on non-essential spending. Consequently, the economic environment is crucial for businesses as it directly influences their profitability and operational strategies. Understanding this factor helps companies to adapt their business models to align with the changing economic landscape.