A PESTLE analysis is a tool used to gain a macro picture of an industry environment. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors.
It allows a company to form an impression of the factors that might impact a new business or industry. Some factors will be more important to different types of businesses, and a PESTLE analysis will help identity risk factors for the SWOT analysis.
Political factors relate to government controls and influences over economy or industry. Government factors may be legislation or economic policies. The political environment can affect an industry through a range of factors, including:
· Trade tariffs
· Fiscal policies
To find information on a city or country’s political environment, investigate the following sources.
Looking for international political information? Try parliamentary websites.
Economic factors a have direct impact on a company’s long-term prospects in a market. The economic environment may affect how a company prices their products or influence the supply and demand model. Environmental factors can include:
· Inflation rate
· Disposable income
· Unemployment rate
· Interest rates
· Foreign exchange rates
· Economic growth patterns
To find information on a city or country’s economic environment, investigate the following sources.
Social factors, such as demographics and culture can impact the industry environment by influencing peak buying periods, purchasing habits, and lifestyle choices. Society is important as people’s culture and lifestyle can influence when, where and how they are likely to engage with products and services. Social factors can include:
· Religion and ethics
· Consumer buying patterns
· Opinions and attitudes
· Brand preferences
To find information on the social and cultural factors in a city or country, investigate the following resources.
Technological factors may have a direct or an indirect influence on an industry. While some industries will be more affected by technology than others, innovations in technology may affect the market and consumer choices and buying power. Technological factors can include:
· Technological development
· Information technology
· Research and Development
· Technological awareness
To find information on the technological factors in a city or country, investigate the following resources.
Legal factors may affect both the internal and external environment of a company. The legal and regulatory environment can affect the policies and procedures of an industry, and can control employment, safety and regulations. Legal factors can include:
· Employment laws
· Consumer protection
· Industry specific regulations
· Regulatory bodies
· Environmental regulations
To find information on the legal factors in a city or country, investigate the following resources.
Environmental factors include all those relating to the physical environment and to general environmental protection requirements. While the environment is more important to some industries, such as tourism, agriculture or food production, these factors may influence a range of different industries and are worth being aware of. Environmental factors include:
· Geographical location
· Stakeholder and consumer values
· Environmental offsets
· Global climate change
To find information on the environmental factors in a city or country, investigate the following resources.
A PESTLE analysis allows a strategic and systematic evaluation of a business's prospects, risks and opportunities in a new environment.
While a SWOT analysis concentrates on a company's internal processes, PESTLE provides information on external factors.
PESTLE can be used for large and small scale projects.