• Category
  • >Business Analytics

What is PESTLE Analysis? Everything you need to know about it

  • Ritesh Pathak
  • Dec 06, 2020
  • Updated on: Nov 21, 2023
What is PESTLE Analysis? Everything you need to know about it title banner

In today’s world, we have so many examples of successful organizations before us. From small startups to bigger firms, every organization is focused on improving and heading ahead. Different tools are leveraged by them for this purpose. The competition has become so fierce in the market that every single decision can change the whole dynamics- either negatively or positively.

 

It becomes necessary for organizations to keep a check on each decision making which in turn aids them in sustaining through the blows of market fluctuations. 

 

Since we are living in a ‘global village’, everything happening around us leaves an impact on us. The same goes for an organization. Generally, in marketing theory, we separate a micro and macroeconomic business environment, with the micro environment primarily being the internal factors affecting a specific industry, that includes the stakeholders and competitors of a particular firm and the macro environment being the external factors influencing a firm, factors which it cannot control. 
 

 

It is not only internal matters that decide a company’s fate, but many external factors also make an equal impact. The political situation in a country, technological developments, environmental factors, the legality of actions, economics, social factors, all play an important role. Organizations are well-aware of this fact, so they leverage an economic tool- PESTLE analysis. 

 

 

In this blog, we will discuss this same tool. We will discuss everything about PESTLE analysis. What does it mean? What are those different factors? How to do a PESTLE analysis? What are its advantages and disadvantages? What is it used for? 

 

 

Read our blog 8 Most Popular Business Analysis Techniques used by Business Analyst

 

 

What is PESTLE Analysis?

 

PESTLE analysis sometimes referred to as PEST analysis, is a concept in marketing principles. This concept is used as a tool by organizations to keep a track of the external factors impacting the organization. PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal, and E for Environmental. On the basis of the organization, it can be reduced to PEST or additional areas can be added (such as Ethical).

 

PESTLE analysis forms a much more comprehensive version of the SWOT analysis. This form of analysis is then compared with the company’s internal strengths and weaknesses via a SWOT analysis. This aids in determining the future scope of action and in developing measures for strategic management.

 

 

Why is PESTLE analysis used? 

 

Businessmen and entrepreneurs often turn towards business analysis tools for aiding them in making suitable decisions for their firm. Before any business venture, the business owners often remain doubtful regarding its outcome and how it would be received.  Pestle analysis is adopted for determining an answer to these questions.  This analysis involves asking questions that give the analyst an idea about the things to keep in mind. These questions are: 

 

  • What is the political situation of a country and what is its effect on the markets?

  • What are the prevalent economic factors? 

  • How is culture affecting the markets and what are its determinants?

  • What are the technological inventions that are trending and what are other future possibilities in this field?

  • What are the current legislations that regulate the industry and if they need to be changed?

  • What are the environmental concerns for the industry? 

 

Analysts find answers to these questions and try to cover all the aspects through this analysis. The PESTLE analysis is more than just understanding the market. This framework represents one of the backbones of strategic management by not only defining what a company should do but also accounting for an organization’s goals and the strategies strung to them.

 

 

Factors of PESTLE Analysis

 

Each of the factors mentioned above, from Political, Economic, Social, Technological, Legal to Environmental, have an impact on an organization. Yet the significance of each of these factors may differ based on the different kinds of industries.

 

 

1. Political factors in PESTLE Analysis

 

Political factors include tax policy, environmental regulations, trade restrictions and reform, tariffs, and also political stability. These factors determine the extent to which a government may influence an industry or a company. For example, the government may bring new tax reforms that might change the whole revenue-generating system of a company.

 

Some tariff trade barriers that can prove to be a hindrance in the way we run our business operations include customs policy and export subsidies. Non-tariff trade barriers meanwhile include determining minimum import prices as well as bans and restrictions on exports.

 

 

2. Economic factors in PESTLE Analysis 

 

Economic factors include economic growth/decline, interest, exchange, inflation and wage rates, minimum wage, working hours, unemployment (local and national), credit availability, and cost of living. These factors are determinants to an economy’s performance that directly impacts a company and also have resonating long term effects.

 

For example, a rise in the inflation rate of any economy would affect the way companies price their products and services. Besides, it would also affect the purchasing power of a consumer and may result in a change in demand/supply models for that economy.

 

You can also take a look at our blog on 4 Ps of Marketing.

 

 

3. Social factors in PESTLE Analysis

 

Social factors include cultural norms and expectations, health consciousness, population growth rates, age distribution, career attitudes, health, and safety. These factors are helpful for companies to better plan their marketing analytics and strategy. For example, the Indian market generally witnesses a surge in demands for vehicles during the last months of the year, due to marriage and the festive season. 

 

These factors are particularly significant for marketers as they target certain customers. Additionally, they also highlight the local workforce and its zeal to operate under certain circumstances.


From Political factors, economic factors, social factors, technological factors, legal factors to environmental factors, the PESTLE analysis comprises each of these factors.

The factors of PESTLE Analysis


4. Technological factors in PESTLE Analysis

 

Technological factors mean the innovations and developments in technologies. These factors impact an organization’s operations. Several new developments like Artificial Intelligence, IoT, Machine Learning, Deep Learning, are being made in the technology field and if a company fails to match up the trend it may lose its position in the market.  

 

A few of the technological factors which are included in the PESTLE analysis include the rate of technological change, the evolution of infrastructure, and any government or institutional research. 

 

 

5. Legal factors in PESTLE Analysis

 

Legal factors include changes to legislation impacting employment, access to materials, quotas, resources, imports/exports, and taxation. These factors have both external and internal sides. Certain laws have an impact on the business environment in a country.

 

Apart from these laws/rules, companies maintain their own set of rules and regulations by which an employee is expected to abide by. So, the legal analysis takes accounts of both these angles and forms strategies keeping them in mind.

 

Recommended blog - AI in the law industry.

 

6. Environmental factors in PESTLE Analysis

 

These factors are mainly concerned with the effect of the surrounding environment and the influence of ecological aspects. These include waste disposal laws, environmental protection laws, energy consumption regulation.

 

This aspect of the PESTLE is crucial for certain industries particularly example tourism, farming, agriculture, etc. However, Global warming and the increased need to switch to sustainable resources; ethical sourcing (both locally and nationally, including supply chain intelligence) have compelled every organization to consider the environmental factors. Corporate Social Responsibility (CSR) has been made compulsory for organizations. 

 

Also Read: Dark side of Information Technology (IT) industry

 

How to do a PESTLE Analysis

 

Conducting a PESTLE Analysis involves some steps which we have mentioned below:

 

  • Identify the scope of the research. It should cover the present and the future scenarios. It should apply to the areas of the business world where the particular organization operates. 

  • Form a good team and assign responsibilities accordingly. Involving diverse people helps in collecting content-rich data. 

  • Identify appropriate sources of information. These may include people seeking professional help regarding an issue or a change/update in current policy. 

  • Gather and assemble the information. Better create a template as the basis for recording the information. 

  • Analyzing the collected information is a significant step. 

  • Create an order of the issues to be addressed. Try to resolve the issue, that can create a big impact, at the earliest.

  • Identify the business-specific options to address the issues.

  • Create a well-informing document for all the stakeholders

  • Disseminate and discuss the findings with stakeholders and decision-makers

  • Decide on the actions to be taken and trends that need to be monitored on an ongoing basis

 

To be effective, organizations must perform PESTLE analysis on an ongoing or regular basis. Organizations that do so enjoy a competitive advantage as they spot trends before others. 
 

What is a PESTLE Analysis used for?

 

A PESTLE analysis is often used as a broad fact-finding activity. It helps an organization establish the external factors that could impact decisions made inside the organization. By understanding the impact these external factors can have on an organization, it becomes handy for organizations to plan better. They can form strategies to minimize the threats and maximize opportunities for themselves. 


 

This image shows the uses of PESTLE Analysis.

Uses of PESTLE Analysis


 

A PESTLE analysis is an appropriate framework that fulfills these purposes. Apart from that, it also helps organizations in a range of business planning situations. These include:

 

1. Strategic business planning

 

A PESTLE analysis report is a useful document to have by your side when starting a business planning process. It provides the senior management team with loads of contextual information about the company like the direction in which the business is heading, brand positioning, growth targets, and the areas of concern that may lead to a decline in growth and productivity.

 

 

2. Workforce Planning

 

Workforce planning is a business process that aligns business and people strategies. A PESTLE analysis helps businesses to identify disruptive changes to business models that may have a profound impact on the future employment landscape. Organizations are facing huge changes in their workforce from increased skills gaps, the creation of job roles that did not exist 10 years ago like the IT department, and job reductions or displacement. 

 

 

3. Marketing Planning

 

As PESTLE analysis brings a lot of information on external factors, it also brings crucial market insights. So, it can help prioritize business activities to accomplish specific marketing objectives within a set timeframe. 

 

Also Read | Marketing Analytics tools

 

4. Product development

 

As mentioned above, a PESTLE analysis also has crucial market insights that tell about the response from customers about a product or service. This helps businesses to decide on whether to enter or leave a route, modify an existing product, and when and what to launch as a new product. 

 

 

5. Organizational Change

 

A PESTLE analysis is a powerful tool for understanding the context for change, and focusing on the areas to make that change successful. In this situation, PESTLE analysis works best with a SWOT analysis. This helps an organization to identify the potential opportunities and threats around labor changes, for example, skill shortage and workforce capabilities. 

 

 

Advantages and Disadvantages of a PESTLE Analysis

 

Everything has both aspects and so does a PESTLE Analysis. Let us look at the advantages as well as the disadvantages of it. 

 

Advantages

 

  • It is a simple framework- easy to understand and conduct

  • It facilitates a better and broader understanding of the business environment.

  • It encourages organizations to develop external and strategic thinking

  • The most talked advantage- it enables an organization to anticipate future business threats and allows it to minimize or nullify the impact

  • It also allows organizations to spot an opportunity and to capitalize on them

 

Disadvantages

 

  • Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s easy to use insufficient data.

  • It’s easy to get lost in the enormous amount of data. So, there always remains a risk of capturing too much data and undertaking too much data analytics that may lead to ‘paralysis by analysis’

  • As a PESTLE analysis works on assumptions, there remains a risk of being wrong

  • Once in a while an attitude doesn’t work with PESTLE analysis. So, it must be a regular practice.

  • The pace of change makes it difficult to anticipate the developments and this may affect the organization in future

 

 

Conclusion

 

It can be stated that PESTLE analysis is a great tool for businesses that can be leveraged for several purposes. It brings information about the possible impact of the six external factors on an organization. This makes it easier for organizations to prepare for any sort of problems caused by these PESTLE factors.

Latest Comments

  • masterdokeya3731b2380fc408f

    Jun 06, 2024

    BUY U.S GENUINE PASSPORT AND DRIVER'S LICENSE.https://perfectdocky.com Buy IELTS & TOEFL Without Taking Exam | Buy Real Visa Online | Buy Fake id Card Online | Buy Registered Passports | Buy Real Registered and Novelty Passports Online | Buy Toefl Certificates OnlineWe are offering Scannable fake ids, driving license and passport that will help you in many situations. whatsapp:    +49 15510525047CONTACT VIA E-mail: info@perfectdocky.com Whatsapp:   +4915510525047 We are the producers of legal documents and we provide documents like license, passport, visa, ssn, citizenship certificate and many more. If you are interested or for more information please do not hesitate to get in touch. We are an independent group of specialized IT professionals and database technicians based in the USA and we are specialized in the production of passport, SSN, license, I.D cards, Birth certificates, diplomas and many other documents of very high quality and other services. We have been producing passport, license, SSN, I.D cards, Birth certificates, diplomas and other documents for over 150 countries.(North America, South America, Europe, Australia, Asia and Africa) We Produce Both Real Database registered passport, license, SSN, I.D cards, Birth certificates, diplomas which are legally used and we also produce Fake or Duplicate or Novelty documents which are just use for Camouflage and Can NOT be used Legally these types of documents are not important so we produce on high demand and order.Buy drivers license online Buy passports online Buy diplomates online Buy SSN online Buy birth certificates online Buy ID cards online Buy visa online Buy certificates online Buy TOEFL, IELTS onlineOrder real and fake drivers license online Order real and fake passports online Order real and fake SSN online Order real and fake birth certificates online Order real and fake ID cards online Order real and fake visa online Order real and fake certificates online Order real and fake TOEFL, IELTS online CONTACT VIA https://perfectdocky.comE-mail: info@perfectdocky.com Whatsapp:   +49 15510525047

  • masterdokeya3731b2380fc408f

    Jun 06, 2024

    WHERE CAN I BUY COUNTERFEIT MONEY,DRIVERS LICENSES,ID CARDS,PASSPORTS (‪whatsapp +49 15510525047) Buy high-quality undetectable grade AA+ counterfeit money Online, real fake passports,id cards,drivers license WhatsApp:+49 15510525047 https://perfectdocky.com email info@perfectdocky.com With the COVID-19 pandemic which may trigger a global recession, we produce authentic currency bills of USD$,British Pounds£ and Euros€ with different serial numbers on each bill. We have instock the semi finish banknote substrates already engraved and designed front and back of the various currencies of each denomination. We need a partner to work with discretely to finish the production of our semi finish banknote substrates and make it legal tender on a percentage which we are going to discuss in a personal meeting in the event that you agree to work with us. We will schedule for a meeting to show you everything and discuss all details and produce samples so you can go test to confirm authenticity. All Notes will pass major test like ultra violet light, pencil test, many more fake money detection. Have a second chance in life with a new identity, protect your privacy, build a new credit history, take back your freedom. We offer real driver's licenses, passports, visas, id card, resident permit, stamps, school diplomas, work permits, marriage certificates, death certificates, green card, credit cards, bank statements and other documents for a number of countries such as: USA , Australia, Belgium, Brazil, Canada, Italy, Finland, France, Germany, Israel, Mexico, Netherlands, South Africa, Spain, United Kingdom, Japan, China! Our team produces high quality products, authentic database passports, databases or citizenship documents and other ID cards. We use high quality equipment and materials to create documents. 20 million of our documents are circulating around the world. WhatsApp:+49 15510525047 https://perfectdocky.com email info@perfectdocky.com -IDs Scan-yes... -HOLOGRAMS: IDENTICAL -BAR CODES: IDS SCAN -UV: YES buy undetectable counterfeit money buy real and fake passport online buy undetectable counterfeit money, buy real and fake driver licenses where to buy fake dollar bills where to buy counterfeit bills where to buy fake bills buy counterfeit bank notes where to buy fake bank notes where can i buy fake dollar bills where to buy counterfeit bank notes Buy counterfeit euro bills Purchase euro fake bills online Where to buy fake British pounds fake banknotes for sale uk fake bank notes for sale counterfeit euro banknotes for sale counterfeit bank notes for sale Where to buy fake euro bills Where to british pounds Fake bank notes for sale Germany Counterfeit bank notes for sale China Buy currency bills Japan Where to buy euro bills online fake money for sale prop money for sale counterfeit money for sale money for sale money tree for sale undetectable fake money for sale real money for sale confederate money for sale legit counterfeit money for sale confederate currency for sale high quality counterfeit money for sale quality counterfeit money for sale high quality undetectable counterfeit banknotes for sale currency for sale banknotes for sale best counterfeit money for sale counterfeit money printer for sale fake money that look real for sale currency dealers near me undetectable counterfeit money for sale high quality undetectable counterfeit money for sale foreign currency for sale real counterfeit money for sale world banknotes for sale

  • hack.ethicsrecovery8eedb82ac49a483f

    Jun 07, 2024

    I never thought i could smile and be in a happy marriage again if not for the help of DR Moses . I got the doctors Email and i emailed him, he got back to me with some encouraging words, he got me some herbs cream which i use for just 8 days and i began to feel the enlargement of my manhood , and without surgery. This went on for a little period of about 10 days and to my surprise my wife keeps screaming that she love my big dick now. Now my wife no longer cheat on me, and my manhood is now about 10.5 inches long on erection and off course very large round. And now my wife uses breasts, hips and bums enlargement. I and my wife are very happy for the help rendered to me by DR Moses HERBS, and i want to say a big thanks to Doctor for the help. you can email him on ( buba.herbalmiraclemedicine@gmail.com ) or call/whats-app him directly on +2349060529305 DOCTOR Moses Buba CAN AS WELL HELP THE FOLLOWING PROBLEMS 1. HIV/AIDS SPELL 2. HERPES SPELL 3. CANCER SPELL 4 IF YOU WANT YOUR EX LOVER BACK SPELL 5 IF YOU NEED A BABY SPELLhim to solve 6 LOW SPERM COUNT SPELL get all your problem solve. No problem is too big for him to solve.

  • Mary Robinson

    Jun 09, 2024

    Good day to everyone reading my post, i'm here to appreciate a legitimate spell caster call Dr Kachi who can help you winning the lottery draw, i have never win a biggest amount in lottery unite the day i saw good reviews about DR Kachi how he has helped a lot of people in different ways both financially/martially and i have been playing Mega Million for 8years now, but things suddenly change the moment i contacted Dr Kachi and explained everything to me about the spell and I accepted. I followed his instructions and played the Mega Million with the numbers he gave me, now i am a proud lottery winner with the help of Dr Kachi spell, i win $640 Million Dollars in Mega Millions Ticket, i am making this known to everyone out there who have been trying all day to win the lottery jackpot, believe me this is the only way to win the lottery, this is the real secret we all have been searching for. I want to thank Dr Kachi for his endless help and his from the United States. you can contact via email drkachispellcast@gmail.com or through Text and Call Number: +1 (209) 893-8075 his website: https://drkachispellcaster.wixsite.com/my-site

  • Mary Robinson

    Jun 09, 2024

    Good day to everyone reading my post, i'm here to appreciate a legitimate spell caster call Dr Kachi who can help you winning the lottery draw, i have never win a biggest amount in lottery unite the day i saw good reviews about DR Kachi how he has helped a lot of people in different ways both financially/martially and i have been playing Mega Million for 8years now, but things suddenly change the moment i contacted Dr Kachi and explained everything to me about the spell and I accepted. I followed his instructions and played the Mega Million with the numbers he gave me, now i am a proud lottery winner with the help of Dr Kachi spell, i win $640 Million Dollars in Mega Millions Ticket, i am making this known to everyone out there who have been trying all day to win the lottery jackpot, believe me this is the only way to win the lottery, this is the real secret we all have been searching for. I want to thank Dr Kachi for his endless help and his from the United States. you can contact via email drkachispellcast@gmail.com or through Text and Call Number: +1 (209) 893-8075 his website: https://drkachispellcaster.wixsite.com/my-site

  • johncase3976c2ff74a8e374e04

    Jun 11, 2024

    Hi there, everyone, I’m John, please to meet you all. I work as a security with a fair rent since I live with a family who doesn’t want me to live alone and have a good paying job. My goal is to build a good credit score to get a good credit card. In April I had 140 dollars or so collections from a gym saying I never canceled my membership. I wasn’t getting charged the monthly fee for it. So, I randomly go on credit karma and see the collections. Few days after I contacted PINNACLE CREDIT SPECIALIST, they increased my score to 809 and improved my credit profile by removing the collections, charge off and late payments. I just saw today it says no more derogatory on my credit Karma. My score went up. I sincerely acknowledge their relentless efforts and urge you to contact PINNACLE CREDIT SPECIALIST for any credit related issue. Contact info: PINNACLECREDITSPECIALIST@GMAIL.COM Or Call 409 231 0041. Honestly, I do not enjoy writing much, but I have let the world know about this genius that helped me.

  • Dara Pellar

    Jun 11, 2024

    TROPICAL DELIGHT RECOVERY- A TRUSTWORTHY CRYPTOCURRENCY RECOVERY HACKER. Tropical Delight Recovery has been a game changer in cryptocurrency recovery. They are extremely swift and efficient, ensuring that every operation runs smoothly and without difficulty. Their service is unparalleled in terms of dependability, and their customer care is always available and helpful. I've never felt more secure or certain that I could fully restore my crypto assets. Tropical Delight Recovery stands out in the business for their remarkable speed, efficiency, and dependability in recovering cryptocurrency, and they come highly recommended! You can contact them at: Whatsapp: +1(347). 913. 658 1, Signal: +1 .614 568.38.73 Telegram: @tropicaldelightrecoveryhacker Email : tropicaldelightrecoveryhacker @ out. Look . Website: htt. ps : // dev - t ropicaldelightrecovery .pantheonsite .io

  • Dara Pellar

    Jun 11, 2024

    TROPICAL DELIGHT RECOVERY- A TRUSTWORTHY CRYPTOCURRENCY RECOVERY HACKER. Tropical Delight Recovery has been a game changer in cryptocurrency recovery. They are extremely swift and efficient, ensuring that every operation runs smoothly and without difficulty. Their service is unparalleled in terms of dependability, and their customer care is always available and helpful. I've never felt more secure or certain that I could fully restore my crypto assets. Tropical Delight Recovery stands out in the business for their remarkable speed, efficiency, and dependability in recovering cryptocurrency, and they come highly recommended! You can contact them at: Whatsapp: +1(347). 913. 658 1, Signal: +1 .614 568.38.73 Telegram: @tropicaldelightrecoveryhacker Email : tropicaldelightrecoveryhacker @ out. Look . Website: htt. ps : // dev - t ropicaldelightrecovery .pantheonsite .io

  • vernonjesse8153eace3e9a25e4325

    Jun 15, 2024

    There was a time, I was a credit disaster, I knew absolutely nothing about how credit works. I’d pay bills late thinking paying late was better than not paying at all. To be honest, I didn’t even know negatives lasted on your reports for 7 years. Why did I pay late? Because at the time, I’d think I needed to buy something shiney and then pay bills. To further my reckless behaviors, I had my house foreclosed on. To be honest, I don’t know why I checked my credit, which ultimately led me to this site where I found PINNACLE CREDIT SPECIALIST, but I’m glad I did, reading as much testimonies as I could. My starting score was (low 500’s). All thanks to PINNACLE CREDIT SPECIALIST, as of today, I’m sitting at EX: 808, TU: 812 and my lowest is EQ: 801. If I can offer one piece of advice that helped me, I’ll advise you to contact PINNACLE by email: PINNACLECREDITSPECIALIST@GMAIL.COM Or call +1 (409) 231-0041. The first time I’m seeing my scores reach the 800 mark, that feeling is right up there with having my first child, marriage.

  • morthematt350615b2408048b9

    Jun 16, 2024

    https://undergroundmeds.com. Introducing Underground Meds - Your Pathway to Premium Health Solutions! 🔥 Are you tired of the endless search for top-notch health products and supplements that truly deliver results? Look no further! Welcome to Underground Meds, your ultimate destination for cutting-edge health solutions that will transform your life. 🏆 Why Choose Underground Meds? 🏆 Unparalleled Quality: We take pride in curating only the highest-quality products from renowned suppliers and manufacturers. Each item in our collection undergoes rigorous testing to ensure purity, potency, and effectiveness. Diverse Range: From immune-boosting essentials to cutting-edge cognitive enhancers, our extensive product selection caters to all your health needs. Discover a treasure trove of supplements that will supercharge your well-being. Expert Guidance: Say goodbye to confusion! Our team of health experts is committed to providing personalized recommendations and expert guidance. We're here to help you make the right choices for your unique health journey. Secure Shopping: Your safety is our top priority. Our website employs state-of-the-art security measures to safeguard your data, ensuring a worry-free shopping experience. Customer Satisfaction: Join thousands of satisfied customers who have experienced remarkable transformations with our products. Read their inspiring stories and embark on your path to wellness. 🎁 Special Offer: Enjoy 15% off on your first purchase with code "HEALTH15" at checkout! 🎁 Don't settle for mediocre health solutions when you deserve the extraordinary! Embrace the Underground Meds experience today and unlock the secrets to a healthier, happier you. Visit our website at https://undergroundmeds.com and take that vital step towards a vibrant life! 🌟 Elevate your health journey with Underground Meds - Where Excellence Meets Wellness! 🌟 order Now : https://undergroundmeds.com https://start.me/w/mPyJMv https://start.me/w/J9eA20 https://start.me/w/oPezGm https://christmancraig.gumroad.com/l/mhpyw https://christmancraig.gumroad.com/l/rlgyo https://christmancraig.gumroad.com/l/wkbad https://christmancraig.gumroad.com/l/kezktt https://anyflip.com/vzyql/ntzk/basic https://www.alltrails.com/explore/map/map-march-31-2024-3b3fff6?u=m&sh=l2ackp https://www.alltrails.com/explore/map/map-march-31-2024-a279094?u=m&sh=l2ackp