PESTLE Analysis

PESTLE Analysis is a simple, useful and widely-used tool that helps you understand the "big picture" of your Political, Economic, Socio-Cultural and Technological, Legal and Environmental aspects. As such, it is used by business leaders worldwide to build their vision of the future. PESTLE analysis is concerned with the environmental influences on a business. Identifying PESTLE influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences. It is important for these reasons:

First, by making effective use of PESTLE Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it; Second, good use of PESTLE Analysis helps you avoid taking action that is doomed to failure from the outset, for reasons beyond your control; and Third, PESTLE is useful when you start operating in a new country or region. Use of PESTLE helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment.

The table below lists some possible factors that could indicate important environmental influences for a business under the PESTLE headings: Political / Legal
- Environmental regulation and protection - Taxation

Economic
- Economic growth - Monetary policy

Social
- Income distribution - Demographics

Technological
- Government spending on research - Government and industry focus on technological effort - New discoveries and development - Speed of technology transfer - Rates of technological obsolescence - Energy use and costs - Changes in material sciences - Impact of changes in Information technology - Internet!

- International trade regulation - Consumer protection - Employment law

- Government spending - Policy towards unemployment - Taxation

- Labor / social mobility - Lifestyle changes - Attitudes to work and leisure - Education - Fashions and fads - Health & welfare

- Government organization / attitude - Competition regulation

- Exchange rates - Inflation - Stage of the business cycle - Economic "mood" consumer confidence

- Living conditions