PESTLE

Analysis
Rowina M. Twano, DBA,RECE
Professor Asso V
 What is PESTLE Analysis?
• It is very important that an organization considers its
environment before beginning the marketing process. In
fact, environmental analysis should be continuous and feed
all aspects of planning. The organization's marketing
environment is made up from:
• 1. The internal environment
• 2. The micro-environment
• 3. The macro-environment e.g. Political (and legal) forces,
Economic forces, Sociocultural forces, and Technological
forces. These are known as PEST factors.
• PESTLE is an analytical tool which
4.
considers external factors and helps you
to think about their impacts
 PESTLE analysis
• Is a useful tool for understanding the “big
picture” of the environment in which you are
operating

• By understanding your environment, you can

take advantage of the opportunities and
minimize the threats.

• This provides the context within which more

detailed planning can take place to take full
advantage of the opportunities that present
themselves.
What is PESTLE Analysis Used
for?
 PESTLE vs. SWOT
• In contrast to a SWOT, PESTLE encourages you
to think about the wider environment and what
might be happening now and in the future which
will either benefit or be of disadvantage to the
organization, individual etc
– a kind of radar which picks up trends and
developments in the external environment which
can be used to inform longer term planning and
strategy making
 Advantages
• It’s a simple framework.
• It facilitates an understanding of the wider
business environment.
• It encourages the development of external and
strategic thinking.
• It can enable an organisation to anticipate future
business threats and take action to avoid or
minimise their impact.
• It can enable an organisation to spot business
opportunities and exploit them fully.
 Disadvantages
• Some PESTLE analysis users oversimplify the
amount of data used for decisions – it’s easy to
use insufficient data.
• The risk of capturing too much data may lead to
‘paralysis by analysis’.
• The data used may be based on assumptions that
later prove to be unfounded.
• The pace of change makes it increasingly difficult
to anticipate developments that may affect an
organisation in the future.
• To be effective, the process needs to be repeated
on a regular basis.
 Political Factors

• The political arena has a huge

influence upon the regulation of
businesses, and the spending
power of consumers and other
businesses.
 Economic Factors

• Marketers need to consider the

state of a trading economy in the
short and long-terms. This is
especially true when planning for
international marketing.
 PESTLE
• Political:
– Government type and stability
– Freedom of the press, rule of law and levels of bureaucracy and
corruption
– Regulation and de-regulation trends
– Social and employment legislation
– Tax policy, and trade and tariff controls
– Environmental and consumer-protection legislation
– Likely changes in the political environment

• Economic:
– Stage of a business cycle
– Current and projected economic growth, inflation and interest rates
– Unemployment and supply of labor
– Labor costs
– Levels of disposable income and income distribution
– Impact of globalization
– Likely impact of technological or other changes on the economy
– Likely changes in the economic environment
 Sociocultural Factors
• The social and cultural influences on
business vary from country to
country. It is very important that
such factors are considered.
 Technological Factors
• Technology is vital for competitive
advantage, and is a major driver of
globalization.
 PESTLE
• Sociological:
– Cultural aspects, health consciousness, population growth rate, age
distribution,
– Organizational culture, attitudes to work, management style, staff
attitudes
– Education, occupations, earning capacity, living standards
– Ethical issues, diversity, immigration/emigration, ethnic/religious
factors
– Media views, law changes affecting social factors, trends,
advertisements, publicity
– Demographics: age, gender, race, family size
• Technological:
– Maturity of technology, competing technological developments,
research funding, technology legislation, new discoveries
– Information technology, internet, global and local communications
– Technology access, licensing, patents, potential innovation,
replacement technology/solutions, inventions, research, intellectual
property issues, advances in manufacturing
– Transportation, energy uses/sources/fuels, associated/dependent
technologies, rates of obsolescence, waste removal/recycling
 PESTLE
• Legal:
– current home market legislation, future legislation
– European/international legislation
– regulatory bodies and processes
– environmental regulations, employment law, consumer
protection
– industry-specific regulations, competitive regulations

• Environmental:
– Ecological
– environmental issues, environmental regulations
– customer values, market values, stakeholder/ investor
values
– management style, staff attitudes, organizational culture,
staff engagement
 Political (Legal) Economic Sociocultural Technological
Environmental Economic growth Income distribution Government research
regulations and spending
protection
Tax policies Interest rates & Demographics, Population growth Industry focus on
monetary policies rates, Age distribution technological effort

International trade Government spending Labor / social mobility New inventions and
regulations and development
restrictions
Contract enforcement Unemployment policy Lifestyle changes Rate of technology
law transfer
Consumer protection

Employment laws Taxation Work/career and leisure attitudes Life cycle and speed of
Entrepreneurial spirit technological
obsolescence

Government organization Exchange rates Education Energy use and costs

/ attitude

Competition regulation Inflation rates Fashion, hypes Information Technology

Political Stability Stage of the business Health consciousness & welfare, (Changes in) Internet
cycle feelings on safety
Safety regulations Consumer confidence Living conditions (Changes in) Mobile
Technology
 Benefits of PESTLE Analysis
There are numerous benefits of conducting a
PEST analysis, which can reap dividends for
your business. The more significant benefits
include:

✓A greater understanding of your company

✓More effective long-term strategic planning
✓Heightened attention to potential threats
and dangers
✓Insight for valuable business opportunities
 Limitations of PESTLE Analysis
✓ Even though [you] analyze all the factors, there is a
chance that they might change within an hour or day due
to its dynamic nature,
✓ Some factors are based on assumptions, so they may
not be accurate.
✓ As the data collect[ed] is huge, one needs to carefully
utilize it in a better way, and as it is from external
sources, one is not sure about the accuracy.
✓ For a PEST analysis to truly be valuable, it should be
used in conjunction with SWOT (strengths, weaknesses,
opportunities and threats), MOST (mission, objective,
strategies, tactics) or SCRS (strategy, current state,
requirements, solution) analyses.