Pestle Analysis

HOW TO USE A PESTLE ANALYSIS
Polimoda
Fabiana Vannuccini

WHAT IS PESTLE ANALYSIS?
• It’s a technique used to identify and evaluate external
factors affecting the performance of an organization
with the aim of gathering information to guide strategic
decision-making.
• It gives a view of the whole environment from many
different angles that one wants to check and keep a
track of while contemplating on a certain idea/plan.
• It helps the company to determine how these factors will
affect the activities of the business in a long term.

HOW TO WRITE A PESTLE FROM SCRATCH?
There are certain questions that one needs to ask while
conducting this analysis, which give them an idea of what things to
keep in mind. They are:
• What is the political situation of the country and how can it
affect the industry?
• What are the prevalent economic factors?
• How much importance does culture has in the market and what
are its determinants? (socio-cultural)
• What technological innovations are likely to pop up and affect
the market structure?
• Are there any current legislations that regulate the industry or
can there be any change in the legislations for the industry?
• What are the environmental concerns for the industry?

FRAMEWORKS FOR THE ANALYSIS
To facilitate the analysis, it can be helpful to create a matrix of the
factors to be analyzed and the opportunities or threats they
represent, as in the table below. This provides a simple framework for
the analysis, but bear in mind that there will be varying degrees of
overlap and interrelation between the different factors.
Opportunities
Threats
Political
Economical
Sociological
Technological

What to explore?

VALUE IS CASH, MONEY, THE LIFEBLOOD OF
BUT IT CAN ALSO BE ACCESS, PRESTIGE, OR
ANYTHING E SEEKS IN ORDER TO GROW.

VALUE IS CASH, MONEY, THE LIFEBLOOD OF
ANY BUSINESS.
BUT IT CAN ALSO BE ACCESS, PRESTIGE, OR
ANYTHING ELSE A COMPANY SEEKS IN ORDER
TO GROW.

WHY DO WE USE IT?
• More than just understanding the market, this framework
represents one of the vertebras of the backbone of strategic
management that not only defines what a company should
do, but also accounts for an organization’s goals and the
strategies related to them.
• It may be so, that the importance of each of the factors may
be different to different kinds of industries, but it is
imperative to any strategy a company wants to develop that
they conduct the PESTLE analysis as it forms a much more
comprehensive version of the SWOT analysis.

THE BEST TIME TO USE A PESTLE ANALYSIS
1) When launching a business
It will be impossible to run a legal business without
following the predetermined political laws and regulations.
But some businesses have more to consider than others.
For example, e-commerce businesses need to follow strict
technological laws. If these e-commerce sites conduct
business internationally, they’re impacted by taxation and
political stability in these other locations too.
Going into business unaware of the possible restrictions
will only brew trouble. Perhaps not right now, but when
it’s time to launch a product or expand. Prevent that
happening by conducting a PESTLE analysis early on.

THE BEST TIME TO USE A PESTLE ANALYSIS CONT.
2) When you are facing problems
Trouble has arrived. You want to take care of it sooner
than later to minimize any long-lasting damage. Many
people often want to move on as quickly as possible
afterwards. That’s normal. But did you know that right
now is the perfect time for a PESTLE analysis? Since you’re
already on alert, it’s easier to notice previously invisible
cracks. To make sure all your bases are covered, it’s time to
break out that trusty PESTLE analysis.

THE BEST TIME TO USE A PESTLE ANALYSIS CONT.
3) When your analyst is on the case
Many business owners will hire a business analyst to improve
working conditions and employee communication. These
people are experts in analysis and problem-solving. That may
involve a PESTLE analysis. The information may solve a specific
problem, but the data could be beneficial for other situations.
It may even bring something to your attention, such as a need
to improve eco-friendliness – not just as a means to improve
customer approval – but as a vehicle promoting
improvements with production and product distribution.

THE WORST TIME FOR A PESTLE ANALYSIS
• just before a product launch
• as a means to improve communication
PESTLE analysis is not an “immediate
intervention” study.

BRAINSTORM POLITICAL FACTORS
This part of the analysis is concerned with how the policies
and actions of government affect the conduct of business.
Legislation may restrict or protect commercial operations in a
number of ways. Issues to be considered include:
• the level of political stability
• the legislative and regulatory framework for
business, employment and trade
• the tax regime and fiscal policy
• programs of forthcoming legislation
• the dominant political ideology.

POLITICS - QUESTIONS TO ASK:
• When is the country's next local, state, or national election? How
could this change government policy?
• Who are the most likely contenders for power? What are their views
on business policy, and on other policies that affect your company?
• Depending on the country, how well developed are property rights
and the rule of law, and how widespread are corruption and
organized crime? How are these situations likely to change, and how
is this likely to affect you?
• Could any pending legislation or taxation changes affect your
business, either positively or negatively?
• How does government approach corporate policy, corporate social
responsibility, environmental issues, and customer protection
legislation? What impact does this have?

BRAINSTORM ECONOMIC FACTORS
This part of the analysis is concerned with overall
prospects for the economy. Key measures include:
• GDP/GNP
• inflation
• interest rates
• exchange rates
• unemployment figures
• wage and price controls
• fiscal and monetary policy.

ECONOMY - QUESTIONS TO ASK:
• How stable is the current economy? Is it growing, stagnating, or
declining?
• Are key exchange rates stable, or do they tend to vary significantly?
• Are customers' levels of disposable income rising or falling? How is
this likely to change in the next few years?
• What is the unemployment rate? Will it be easy to build a skilled
workforce? Or will it be expensive to hire skilled labor?
• Do consumers and businesses have easy access to credit? If not, how
will this affect your organization?
• How is globalization affecting the economic environment?
• Are there any other economic factors that you should consider?

BRAINSTORM SOCIO-CULTURAL FACTORS
These are probably the most difficult factors to
quantify and predict, as personal attitudes, values
and beliefs are involved. Factors to be included:
• levels of education
• employment patterns
• career expectations
• family relationships
• lifestyle preferences
• trends in fashion and taste
• spending patterns
• religious beliefs

CULTURE- QUESTIONS TO ASK:
• What is the population's growth rate and age profile? How is this
likely to change?
• Are generational shifts in attitude likely to affect what you're doing?
• What are your society's levels of health, education, and social
mobility? How are these changing, and what impact does this have?
• What employment patterns, job market trends, and attitudes toward
work can you observe? Are these different for different age groups?
• What social attitudes and social taboos could affect your business?
Have there been recent socio-cultural changes that might affect this?
• How do religious beliefs and lifestyle choices affect the population?
• Are any other socio-cultural factors likely to drive change for your
business?

BRAINSTORM TECHNOLOGICAL FACTORS
Rapid technological change has had far-reaching
effects on business in past decades. Factors to be
considered include:
• investment in research and development
• new technologies and inventions
• Internet and e-commerce developments
• developments in production technology
• rates of obsolescence.

TECHNOLOGY - QUESTIONS TO ASK:
• Are there any new technologies that you could be using?
• Do any of your competitors have access to new technologies that
could redefine their products?
• In which areas do governments and educational institutions focus
their research? Is there anything you can take advantage of?
• How have infrastructure changes affected work patterns (for
example, levels of remote working)?
• Are there existing technological hubs that you could work with or
learn from?
• Are there any other technological factors that you should consider?

PEST VARIATIONS
There are variations of PEST analysis that bring other factors into
consideration. These include:
• PESTLE/PESTEL: Political, Economic, Socio-Cultural, Technological,
Legal, Environmental.
• PESTLIED: Political, Economic, Socio-Cultural, Technological,
Legal, International, Environmental, Demographic.
• STEEPLE: Social/Demographic, Technological, Economic,
Environmental, Political, Legal, Ethical.
• SLEPT: Socio-Cultural, Legal, Economic, Political, Technological.
• LONGPESTLE: Local, National, and Global versions of PESTLE.
• SPECTACLES: Social, Political, Economic, Cultural, Technological,
Aesthetic, Customers, Legal, Environmental, Sectoral

RESOURCES
Images from Google
https://pestleanalysis.com/the-best-and-worst-times-to-use-pestle-analysis/
https://www.mindtools.com/pages/article/newTMC_09.htm
https://www.managers.org.uk/~/media/Files/Campus%20CMI/Checklists%20PD
P/Carrying%20out%20a%20PEST%20analysis