The Best way to do

PEST Analysis
A brief introduction to the PESTLEWeb method

Dr Rob Collins
www.PESTLEWeb.com

© Rob Collins 2010

Setting expectations

• Don’t expect to be ‘done in 10 minutes’

• It will take time to do an analysis that is:
• High quality
• Information rich
• Rigorous and Systematic
• Valuable to your business
• (or gets a top grade for your business strategy paper)

• Every step of the analysis increases..

• your understanding
• your sensitivity to your business environment
© Rob Collins 2010
Overview of the Method

1. Initial generation
2. Cause consequence links
3. Business Impacts
4. Research
5. Importance
6. Future Scenarios
7. Communicate!

© Rob Collins 2010

Step 1: Initial Generation

• If you have already identified any PEST /

PESTLE issues make a list of these
• Use checklists to help you identify some
issues
• A checklist is included in this slide-deck
• Start drawing!
• Copy each item into a
block in the diagram
• Label the block with
the correct type

© Rob Collins 2010

Step 2: Cause/Consequence Links

• For each PESTLEWeb block look for

possible causes and consequences…
• Try to identify industry relevant items
• Add these to the diagram
• Look for threads or a
or stories that run
through the diagram
• Link the PESTLEWeb
elements together to
show the logic of your
argument
© Rob Collins 2010
Step 3: Business Impacts

• As consequences for your business add

these to the diagrams as “impact” boxes

© Rob Collins 2010

Step 4: Research

• Don’t expect to have all of the

knowledge already
• Use the emerging PESTLEWeb to
guide your search
• Form hypotheses and go search for
evidence
• Engage in conversations with people
with knowledge in specific areas
• Ask ‘tough questions’
© Rob Collins 2010
Step 4: Importance

• Review each item and decide the

relative:
• Importance to your business
• Risk it may pose
• Opportunity it may
offer
• Likelihood of
occurrence

© Rob Collins 2010

Step 5: Future Scenarios

• Consider the important issues and threads

on your PESTLEWeb model
• What are the possible future scenarios
within these threads?
• Consider scenarios that:
• Would have most impact
• Are most likely
• Are reasonably differentiated
• Give the threads titles so you can talk
about them
• E.g. “Reversal in trend towards globalisation”
© Rob Collins 2010
Step 6: Communicate!

• Use your PESTLEWeb model to

communicate with others
• Draw people into the ‘Strategic
Conversation’
• Search out diverse views
• Challenge the analysis and scenarios
• Challenge your projects against your
PESTLEWeb view of the world

© Rob Collins 2010

PESTLE Checklist: Political
• Political stability
• Risk of military invasion
• Legal framework for
contract enforcement
• Intellectual property
protection
• Trade regulations &
tariffs
• Favored trading partners
• Anti-trust laws
• Pricing regulations
• Taxation - tax rates and
incentives
• Work week
• Wage legislation -
minimum wage and
overtime
• Mandatory employee
benefits
• Industrial safety
regulations
• Product labeling
requirements
• Ecological/environmental
legislation
• Current legislation
• Future legislation
• International legislation
• Regulatory bodies and
processes
• Government policies
• Government term and
change
• Trading policies
• Funding, grants and
initiatives
• Home market pressure
groups
• International pressure
groups
• Wars and conflicts
© Rob Collins 2010
 PESTLE Checklist: Economic
• Type of economic system
in countries of operation
• Government intervention
in the free market
• Comparative advantages
of host country
• Exchange rates &
stability of host country
currency
• Efficiency of financial
markets
• Infrastructure quality
• Skill level of workforce
• Labor costs Economic
growth rate
• Discretionary income
• Unemployment rate
• Inflation rate
• Interest rates
• Home economy
• Economy trends
• Overseas economies
• General taxation
• Business cycle stage (e.g.
Prosperity, recession,
recovery)
• Taxation specific to
product/services
• Seasonality issues
• Market/trade cycles
• Specific industry factors
• Market routes trends
• Distribution trends
• Customer/end-user drivers
• Interest/ exchange rates
• International trade and
• Monetary issues
© Rob Collins 2010
 PESTLE Checklist: Social
• Demographics
• Class structure
• Education
• Culture (gender roles, etc.)
• Entrepreneurial spirit
• Attitudes (health,
environmental
consciousness, etc.)
• Leisure interests
• Lifestyle trends
• Demographics
• Consumer attitudes and
opinions
• Media views
• Law changes affecting
social factors
• Brand
• Consumer buying patterns
• Fashion and role models
• Major events and
influences
• Buying access and trends
• Ethnic/religious factors
• Advertising and publicity
• Ethical issues
© Rob Collins 2010
 PESTLE Checklist: Technological
• Recent technological
developments
• Technology's impact on
product offering
• Impact on cost structure
• Impact on value chain
structure
• Rate of technological
diffusion
• Competing technology
• Research funding
• Associated and 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
© Rob Collins 2010
What others are saying …
 Your business needs ‘radar’ to
scan your current environment
for threats and opportunities
Day, G.S. and Schoemaker, P.J.H
“Peripheral Vision: Detecting the weak signals
that make or break your company”

 Your strategic success depends

on a deep understanding of
future scenarios
Van Der Heijden, (1996)
“Scenarios: The art of Strategic Conversation”

© Rob Collins 2010

PESTLEWeb turns a list of
TM

unrelated facts into a

– Convincing ..
– Relevant …
– Well-structured ..
…argument

© Rob Collins 2010

PESTLEWeb TM

Picture your Business Environment

www.PESTLEWeb.com

© Rob Collins 2010