What is PESTLE Analysis?
Today’s blog post is all about PESTLE Analysis, we’re going to talk about what it is, how it can help your business and generally how to use it.
What is PESTLE?
PESTLE Analysis, what is it? PESTLE is a management-based framework and diagnostic tool which will help your business understand the external factors which can impact your business as well as any strategy and business decisions.
By using PESTLE, you can help with the regular planning of the business, whether this is strategic and marketing, product development or implementing changes to the business overall.
PESTLE standards for, Political, Economic, Social, Technology, Legal and Environment. Now let’s break each section down.
P: Political – Here we will be looking at political factors that may affect your business of the country or countries you are working from. You will need to think about and look at any tax implications, industry regulations, contractual and trade agreements and any possible restrictions which may be in place
E: Economic: Here we will be looking at any economic factors that include things such as exchange rates, economic growth, inflation, interest rates as well as the cost of living and consumer spending.
S: Social: Here we are looking at the social area of things, so lifestyle factors, cultural normalities, careers and work life balance.
T: Technology: This section is looking at all aspects of technology and how it impacts and works with your business. Here we are looking at impacts and how your business works with data storage, cloud, smart devices and IoT, social, and more recently AI or artificial intelligence.
E: Environmental: Here we are looking to make sure that the business understands what the environment impacts might be through trading, this would include suppliers, partners and distribution of goods. Here we’re looking to ensure that you are being responsible and that your carbon emissions are reduced, if possible.
L: Legality: The legal section is all about the legal landscape and how it could impact your business. So we are looking at various laws such as employment and company/trading laws and ensuring as a business you know what you need to be compliant with and what you need to read up on and comply with.
How to analyse?
Now that we know what PESTLE is, we now need to know how to perform analysis of your business when it’s mapped against the PESTLE steps.
The easiest way to perform a PESTLE analysis of your business is to have a spreadsheet that contains the sections of PESTLE and has columns for external factors, factors that could impact your industry as well as what the importance is to your business.
Once you have this spreadsheet or other form of documentation in place, you will need to look and identify what areas are being covered and what could impact your business. You will need to think about who is going to perform this analysis, do they have the knowledge and experience of both the business as well as the job at hand?
You will have to ensure that once you are gathering the information that you also analyse the information that has been obtained and how it impacts your business. By doing this you can identify what areas are risky for your business and then you can look at remediating these risks.
Once all the findings have been identified they should be written up and provided to senior management so that they are aware and have an understanding of any potential impacts to the business.
However, this isn’t the end of it, you will need to review these findings frequently and see if things have changed, or can you as a business, remediate more issued and reduce all the findings over time.
We hope this is useful to you.