What is PESTLE

Analysis?

■ A PESTLE analysis is a framework or tool

used by marketers to analyze and monitor
the macro-environmental (external
marketing environment) factors that have
an impact on an organization. The result of
which is used to identify threats and
weaknesses which is used in a
SWOT analysis.
■ The 6 factors make up the acronym
PESTEL.

■ Each letter represents one factor. It is often

called PESTLE.

■ You may these factors using other tests

too. PEST, STEEP, and STEEPLE are similar
analyses. Some other variations are
STEPJE, STEP, and LEPEST.

■ Managers can choose any based on the

nature of the firm and the factors they wish
to study.
Political Factors

■ The political factors account for all the political

activities that go on within a country and if
any external force might tip the scales in a
certain way.

 Trading policies
 Government changes
 Funding
 Foreign pressures
 Conflicts in the political area
 Shareholder and their demands
Economic Factors

■ The economic factors take into view the

economic condition prevalent in the country and
if the global economic scenarios might make it
shift or not.

 Disposable income
 Unemployment level
 Foreign Exchange rates
 Interest rates
 Trade tariffs
 Inflation rate
Social Factors

■ Social factors are your consumers. You need to look

at buying habits, emotional needs, and consumer
behaviour in this section. Because these are the
people who directly influence your sales.

 Ethnic/religious factors
 Major world events
 Demographics
 Consumer opinions and attitudes
 Trends
 Education
 Brand preferences
Technological Factors

■ Technology can be directly involved with company

products, like manufacturing technologies.

 Technological development
 Research and development
 Associated Technologies
 Patents
 Licensing
 Information technology
 Communication
Legal Factors

■ Legal factors have to do with all the legislative and

procedural components in an economy. Also, this
takes into account certain standards that your
business might have to meet in order to start
production/promotion.

 Employment law
 Consumer protection
 Industry-spesific regulations
 Competitive regulations
 Future legislation
 Environmental regulations
Environmental Factors

■ Environmental factors have to do with geographical

locations and other related environmental factors
that may influence upon the nature of the trade
you’re in. For example, agri-businesses hugely
depend on this form of analysis.

 Ecological
 Environmental issues
 Staff attitudes
 Management style
 Environmental regulations
 Consumer values
Political Coca Cola products are at the mercy of the FDA. They must meet regulations, given by
the government, to put products on store shelves.

Economical Coca Cola products are distributed to hundreds of countries. And their income (roughly
70%) is from countries outside the United States.

Social In Japan, they created 30 alternative flavors to appeal to Japanese consumers. In China,
they are making similar efforts.

Technological Machinery have helped Coca Cola manufacture products in better and higher quantities.
Coca Cola has factories in Britain with top of the name machinery to ensure fast delivery
times and quality product development.

Legal Coca Cola retains all rights related to their business, including past and future products
developed with a patented process.

Environmental Coca Cola is affected by water accessibility. Water is necessary for soft drink
development. But should something happen, like climate change, the company may be
under fire.
Aim of PEST analysis

■ PEST analysis describes a framework of macro-

environmental factors used in the environmental
scanning component of strategic management.
■ It is part of an external analysis when conducting
a strategic analysis or doing market research, and
gives an overview of the different macro-
environmental factors to be taken into
consideration.
■ It is a strategic tool for understanding market
growth or decline, business position, potential
and direction for operations.
PESTLEWe
b
■ The PEST factors, combined with external micro-
environmental factors and internal drivers, can be
classified as opportunities and threats in a SWOT
analysis.
■ A graphical method for PEST analysis called
'PESTLEWeb' has been developed at Henley
Business School in the UK.
■ Research has shown that PESTLEWeb diagrams
are considered by users to be more logical,
rational and convincing than traditional PEST
analysis.
PESTLEWe
b
■ PESTLEWeb is a graphical ‘tool’ that allows you to
map out your PESTLE Analysis as a picture. It
helps to use pictures because…

 Human beings are very good at absorbing

information visually through pictures
 To do a good PESTLE analysis you need to
show connections between things in the
environment and impacts on your business
 Pictures are a great way of building
collaboration