The results of a PESTLE Analysis are often used as input for other business management tools, such as SWOT Analysis, SOAR Analysis, Risk Assessment or Business Model Canvas. A PESTLE Analysis helps a team, most often Marketing but can be any management team, understand the market and positioning of the business or product, and to plan strategy in new and existing markets.
The PESTLE framework helps teams by encouraging strategic thinking, including how the existing strategy fits into the broader market. It also looks at important external influences and allows leaders to make more knowledgeable decisions.
The factors explored in a PESTLE Analysis include:
- Political: The extent to which political factors influence the market. This would include new taxes, laws, or tariffs that would affect a new or existing product.
- Economic: This includes overall economic forces that could affect your product, such as inflation rates, interest rates, foreign exchange rates, or economic growth patterns.
- Social: These factors look the social environment of the market, such as cultural trends, demographics and population analysis. Also important to this part of the analysis are attitudes and shared beliefs of the target consumer, including those around health, work, leisure, money, family and religion.
Technological: These factors include advancements in technology which could influence your product, either positively or negatively. Examples include communication technology, automation, legislation around technology and intellectual property, as well as competitor technology development.
Legal: This includes current and future legal and regulatory requirements impacting a product. These factors can include laws around consumer protection, labor, health and safety, taxes and trade regulations in the individual countries where the product will be sold.
Environmental: These factors include all those that influence or are determined by the surrounding environment. This aspect of the PESTLE is most important for industries such as tourism, farming, and agriculture. Examples of factors to analyze from an environmental angle are climate, weather, geographical location, and climate changes.
It is important to consider not only current factors, but how potential changes in each factor might impact the business in the future. While using the PESTLE Analysis framework, it is also beneficial to have input from participants across multiple departments in order to consider many different perspectives.