PESTLE Analysis Tool: How to Analyze Your Business Environment | ScroogeMarketer - Deepstash

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What is PESTLE analysis and how to use it?

What is PESTLE analysis and how to use it?

The business world is constantly changing, and it's important for businesses to be able to analyze their environment and make changes accordingly.

One tool that can help with this is the PESTLE analysis tool.

This tool can help you assess your business environment by looking at six factors: political, economic, social, technological, legal, and environmental.

Let's take a closer look at each of these factors.

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1) Political Factors

1) Political Factors

When you examine political variables, you're considering how government policy and activities affect the economy as well as other elements that may influence a company.

The following are some of them:

  • Elections
  • Cold-war
  • Trade Restrictions
  • Tariffs
  • Bureaucracy

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2) Economic Factors

2) Economic Factors

Economic Factors consider a number of variables in the economy, as well as how various parts of the economy may influence your company.

Central Banks and other government agencies frequently track and publish these economic indicators.

The following are some examples:

  • GDP value and growth rate
  • Taxation
  • Interest Rates
  • Exchange Rates
  • Inflation
  • Consumer Price Index (CPI)
  • Unemployment Rates

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3) Social Factors

3) Social Factors

The PESTEL analysis takes into account sociological aspects that are linked to society's cultural and demographic changes.

The influence of social norms and pressures on consumer choice is critical in determining consumer behavior.

The following factors must be considered:

  • Cultural Aspects & Perceptions
  • Eating Habits
  • Festivals
  • Religion

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4) Technological Factors

4) Technological Factors

Technological elements are related to innovation in the sector and the overall economy.

Being unaware of current industry trends might be detrimental to a company's operations.

The following are examples of technological components:

  • Internet connectivity
  • Automation

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5) Legal Factors

5) Legal Factors

The distinction between political and legal variables is frequently unclear in the context of a PESTEL analysis.

Legal factors are concerned with any legal forces that restrict or enable a company's activities.

Legal factors include the following:

  • Industry Regulation
  • Licenses & Permits
  • Labor Laws

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6) Environmental Factors

6) Environmental Factors

These factors have little to do with the company's actual operations, such as climate, pollution, weather, and environmental regulations.

The company might have to spend money on green technologies, or it may be affected by government regulations.

Key environmental factors include the following:

  • Waste Treatment
  • Usage of raw materials
  • Temperature
  • Climate Change
  • Pollution
  • Natural disasters (tsunamis, tornadoes, etc.)

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Using PESTLE With Other Tools

The conclusions drawn from a PESTEL analysis may be utilized in other strategic frameworks such as SWOT Analysis and Porter's 5 Forces where relevant.

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CURATED BY

weeklyconcepts

Management concepts explained like tweets.

The PESTEL framework is an important strategic tool for understanding the macroenvironment in which your business operates.

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