PESTLE Analysis

What is PESTLE Analysis?

There are many companies in the world who conducts PESTLE analysis on their brands in order to ascertain strategies for the future or to understand the market before launching their products.

PESTLE Analysis

It is a fundamental tool used for market planning and strategizing that must be carried out to comprehend market trends and the systematic risks involved in the market. It is a macro environment which is used to understand the impact of the external factors on the organization.

Originally known as PEST Analysis.

PESTLE stands for:

Political

Economical

Social

Technological

Legal

Environmental

 Political

It affects the organizations because of government regulations and legal issues.

Example:

  • Political stability
  • Tax policy
  • Employment and labor law
  • Environmental regulations
  • Trade restrictions
  • Tariffs etc.

Economical

It affects the decision making process of the organization.

A global player must examine the economic issues in the world and find opportunities with such conditions for business growth.

Example:

  • Economic growth
  • Interest rates
  • Inflation rate

Social

It represents the culture of the society that an organization operates within. It includes demographics, age distribution, population growth rates etc.

Example:

  • Age distribution
  • Population growth rate
  • Emphasis on safety
  • Career attitudes

Technological

It is related to new inventions and development.  Affect the cost and quality of the outputs.

Example:

  • Automation
  • Technology incentives
  • Rate of technological change
  • R&D activity

Legal

It consists of both external and internal sides. There are certain laws that affect both sides of the business environment.

It influences the company’s operation, its costs, and the demand for its products.

Example:

  • Consumer law
  • Antitrust law
  • Employment law
  • Discrimination law
  • Health and safety law

Environmental

It refers to ecological and environmental aspects such as climate, weather and climate change. Mostly it is useful for the certain industries like tourism, farming, agriculture etc.

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