What is PESTLE Analysis?
PESTLE analysis is a way of analysing the key external factors that might influence our organisation.
It helps us to understand the political, economic, social, and technological, legal and environmental changes that will shape our business environment.
As a manager, we can use the results of the analysis to guide our strategic decision-making.
Six Elements of PESTLE
There are six elements to a PESTLE analysis: Political, Economic, Sociological, Technological, Legal, and Environmental.
Let’s take a closer look:
| Political | Economic |
| Changes brought about by powerful bodies such as governments, the European Union (EU), Trade union movement and other regulatory bodies. |
Economic climate, interest rates (which affect the cost of borrowing and potentially, company profitability), skills shortages, consumer debt, demand for goods, import tariffs etc.
|
| Sociological | Technological |
| One parent families, an ageing population, consumer expectations, demographic changes, immigrant workers, lifestyles, consumer attitudes to social environmental.
|
Developments in medicine, mobile phones, energy sources and the internet |
| Legal | Environmental |
| New laws originating from acts of Parliament, interpretations of the law by courts (both Domestic and European), International Laws.
|
Climate change, pollution, recycling, carbon reduction etc. |
How to use PESTLE:
- Use each heading to discuss the major characteristics of your business environment and from this, draw conclusions about the significant forces of change operating within it.
- This will then provide a starting point for more detailed planning, within which you will be able to minimise risk and take full advantage of the opportunities that present themselves.
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