: Why PESTLE Analysis is the Business Tool of the Future

Students pursuing business studies are no strangers to PESTLE analysis. One of the best tools to measure the effects of external factors on a business, PESTLE tries to look beyond industrial factors that influence the performance of a business or organisation.

A mnemonic for political, economic, social, technological, legal and environmental factors, PESTLE poses invaluable questions in a business scenario. By answering each question as relevant to the business, managers can thus successfully predict risks and liabilities as well as decide the next course of action. 

Questions that PESTLE seeks to answer
PESTLE analysis presents a crucial question to each of the external factors for measuring the extent to which it can influence business. Here are a few important questions to consider when using this technique to analyse the impact of external factors on a business.
    How can the current political situation of the country affect a business or an industry?
    Which are the most influential economic factors for the business?
    What are the main determining factors of culture and how does it affect the market?
    What are the influences of new technological innovations on business?
    What are the major legal factors at play for the industry?
    Which environmental concerns should be given importance for the industry?

Factors unearthed by PESTLE that affect a business
Management studies teaches us that PESTLE plays a major role in unearthing some of the most influential factors for a business. The factors that can take on a bigger role within a business framework are as follows, categorised according to PESTLE analysis.
►    Political factors

-    Government policies
-    Trading policies
-    Lobbying and opposition groups
-    Terrorism and war
-    Industry grants and funding
-    Inter-country trading relations
-    Bureaucracy

►    Economic factors

-    Tax policies
-    Rates of interest
-    Trends in economy
-    Industry growth
-    Inflation rates
-    Import and export ratio
-    International trade policies
-    Foreign exchange rates

►    Social factors

-    Demographical factors
-    Work culture and ethics
-    Brand and company image
-    Print and digital media opinions
-    Consumer behaviour
-    Social ethics
-    Cultural restrictions
-    Publicity and marketing trends

►    Technological factors

-    New technological innovation
-    Legislation for use of technology
-    Communication and information systems
-    Development of competitor technology
-    Intellectual property factors
-    Research and innovation

►    Legal factors

-    Existing laws
-    Future amendment
-    Scope of international legislation
-    Laws of employment
-    Laws of consumer protection
-    Health and safety laws
-    Industry-specific laws
-    Tax regulations
-    Regulatory process and governing bodies

►    Environmental factors

-    Reducing carbon footprint
-    Environmental liabilities
-    Sustainable future
-    Ecological laws
-    Environmental laws

PESTEL or PESTLE uncovers and analyses the factors mentioned above when calculating their impacts on a business or industry. Its vast reach on analyzing so many factors when placed in a business environment thus makes it a valuable tool for managers in the days to come. 

Photo Gallery

0 Comments Write your comment

    1. Loading...