The PESTLE Analysis

A PESTLE Analysis is a useful tool for understanding the industry and is often used in
conjunction with a SWOT analysis to assess the situation of an individual business.

PESTLE stands for “Political, Economic, Social, Technical, Legal and Environmental”
factors.

Factor Often Comprised Of

Political - Current taxation policy
- Future taxation policy
- The current and future political support
- Grants, funding and initiatives
- Trade bodies
- Effect of wars or worsening relations with particular
countries
 
Economic - Overall economic situation
- Strength of consumer spending
- Current and future levels of government spending
- Ease of access to loans
- Current and future level of interest rates, inflation and
unemployment
- Specific taxation policies and trends
- Exchange rates
 
Sociological - Demographics
- Lifestyle patterns and changes
- Attitudes towards issues such as education, corporate
responsibility and the environment
- Social mobility
- Media views and perceptions
- Ethnic and religious differences
 

Technological - Relevant current and future technology innovations

- The level of research funding
- The ways in which consumers make purchases
- Intellectual property rights and copyright infringements
- Global communication technological advances
 

Legal - Legislation in areas such as employment, competition and

health & safety
- Future legislation changes
- Changes in European law
- Trading policies
- Regulatory bodies
 

Environmental - The level of pollution created by the product or service

- Recycling considerations
- Attitudes to the environment from the government, media
and consumers
- Current and future environmental legislative changes
PESTLE Analysis factors Your notes Potential Implication and importance
Impact:
The list below is just to get you About your   Time Type: Impact: Relative
started. Remember to put these , organization. H - High Frame:     Importance
and others that you add in the How might the M - Medium 0-6 Positive + Increasing Critical
context of your organization or factors listed L – Low months Negative > Important
business. on the left U- 6-12 - Unchanged Un-important
For example if you are a small impact your Undetermined months Unknown = Unknown
private company the behaviours of business or 12-24 Decreasing
a BP / Tesco or a large part of the months <
international player may well organization? 24 + Unknown
impact on you. months
If you are a local authority,
government changes will change
your priorities.
Political            
Trading policies  
Funding, grants and initiatives  
Home market lobbying/pressure  
groups  
Local authority rules/ local bylaws  
etc
International pressure groups
Wars and conflict
Government policies
Government term and change
Elections
Inter-country
relationships/attitudes
Terrorism
Political trends
Governmental leadership
Government structures
Internal political issues
Shareholder/ stakeholder needs/
demands
Others
Economic            
Home economy situation
Home economy trends
Overseas economies and trends
General taxation issues
Taxation changes specific to
product/services
Seasonality/weather issues
Market and trade cycles
Specific industry factors
Market routes and distribution
trends
Customer/end-user drivers
International trade/monetary
issues
Disposable income
Job growth/unemployment
Exchange rates
Tariffs
Inflation
Interest and exchange rates
Consumer confidence index
Import/export ratios
Production level
Internal finance
Internal cash flow
Others
Social            
Consumer attitudes and opinions
Media views
Law affecting social factors
Brand, company, technology image
Consumer buying patterns
Major events and influences
Buying access and trends
Ethnic/religious factors
Advertising and publicity
Ethical issues
Demographics (age, gender, race,
family size,)
Lifestyle changes
Population shifts
Education
Trends & Fads
Diversity
Immigration/emigration
Health
Living standards
Housing trends
Fashion & role models
Attitudes to work
Attitudes to people doing certain
types of work
Leisure activities
Occupations
Earning capacity
Staff attitudes
Management style
Organizational culture
Changes to education system
Others
Technological            
Competing technology
development
Research funding
Associated/dependent technologies
Replacement technology/solutions
Maturity of technology
Manufacturing maturity and
capacity
Information and communications
Consumer buying
mechanisms/technology
Technology legislation
Innovation potential
Technology access, licensing,
patents
Intellectual property issues
Global communications
Inventions
Innovations
New discoveries
Research
Energy uses/sources/fuels
Communications
Rate of obsolescence
Health (pharmaceutical,
equipment, etc.)
Manufacturing advances
Information technology
Internet
Transportation
Bio-tech
Genetics
Waste removal/recycling
Email
M-learning
E-learning
Collaboration tools
Software changes
RSI
Others
Legal            
Current legislation home market
Future legislation
European/international legislation
Regulatory bodies and processes
Environmental regulations
Employment law
Consumer protection
Industry-specific regulations
Competitive regulations
Others
Environmental/ Ecological            
Environmental issues
International
National
Local
Environmental regulations
Customer values
Market values
Stakeholder/ investor values
Staff attitudes
Management style
Organizational culture
Staff morale
Staff engagement
Global factors
EU based factors
Others
 PESTLE Analysis
Category Factors

Political

Economic

Social

Technological

Legal

Environmental
 The SWOT Analysis
A SWOT analysis should be conducted after the PESTLE analysis, as the external
environment impacts on the strengths, weaknesses, opportunities and threats that the
business faces.

An organization should strive to exploit its strengths and pursue the identified
opportunities. Similarly, the threats ands weaknesses should be assessed and possible
options identified so as to minimize these. These options may include diversification,
targeting a different customer segment, or product development.

Strengths and weaknesses are internal.

Opportunities and threats are external.

Strengths
-   What’s different about your business?
-   What do you do well?
- What unique resources or knowledge
do you have?
- People, resources, innovation,
ideas, marketing, operations,
finance
Think from an internal and external
perspective. For example, if all your
competitors have a high quality product
then having a high quality product is not
a strength, it’s a necessity.
Opportunities
-   What trends present an opportunity to
you?
-   Are there any complementary
products which you could look to
expand into?
-   Are there any potentially beneficial
technological or legal developments?
- PESTLE
 
Refer back to your strengths and look at
whether you can exploit any
opportunities through using them.
Weaknesses
-   What do your competitors have that you
don’t?
-   What areas can you improve at?
- What weaknesses do people perceive
you as having?
- People, resources, innovation, ideas,
marketing, operations, finance
Perception is just as important as the
reality here. Do customers perceive you as
having certain weaknesses? Where do you
think you could do better?
Threats
-   What legal and technological
developments could threaten your
business?
-   Are any new entrants likely?
-   What does your competition plan to do?
- PESTLE
 
Threats may often arise as a result of your
weaknesses. Assessing your weaknesses
will help you identify future threats
and assess how to minimize them.
The Big 8 – SWOT Analysis