Pestle: If you are considering your business strategy, then this is a common tool used to assess your business environment. It is an acronym standing for the six external factors affecting your business.
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Political
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Economic
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Social
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Technological
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Legal
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Environment
PESTLE analysis examines Political, Economic, Social, Technological, Legal, and Environmental factors to understand their impact on an organization.
In the present business climate, a PESTLE analysis can be very helpful in determining your long-term goals and the strategy to achieve them. Your analysis should take the form of a table like the one below:
| Category | Political | Economic | Social | Technology | Legal | Environment |
| Possible factors | ||||||
| Business Impact | ||||||
| Time frame | ||||||
| Type of impact | ||||||
| Rate of impact | ||||||
| Importance |
Have a go at creating this table, guessing what the headings mean. If you then decide to develop the technique, a Google search will throw up a lot of guidance. Here is an example from CIPD: https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-factsheet
Using PESTLE analysis allows businesses to anticipate market trends and adapt strategies accordingly.
Political factors include government policies, trade tariffs, and political stability, which can influence market conditions and regulations. Economic factors encompass interest rates, inflation, and economic growth, affecting purchasing power and business costs.
Social factors involve demographic changes, cultural trends, and consumer behaviors, guiding product development and marketing strategies. Technological factors cover innovations and advancements that can streamline operations or create new opportunities.
Legal factors pertain to laws and regulations, such as employment laws and health and safety standards, ensuring compliance and avoiding legal issues. Environmental factors focus on sustainability and ecological impacts, increasingly important as businesses strive to meet environmental regulations and consumer expectations.
Incorporating PESTLE analysis into your strategic planning provides a comprehensive view of external influences, enabling informed decision-making and enhancing your business’s resilience and competitive edge. Regularly updating your PESTLE analysis ensures that your strategy remains relevant in a constantly evolving business landscape.
For more information email Ray Baxter at [email protected]