PESTLE Analysis – When beginning a new company or entering a foreign market

reogma|PESTLE Analysis - When beginning a new company or entering a foreign market

 Actually, originated as PEST Analysis, this framework is used in the early stages of strategy development to describe the landscape and ecosystem in which a company operates (PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal).

Note: STEEPLE (Social, Technological, Economic, Environmental, Legal, Ethical) and DESTEP (Demographic, Economic, Social, Technological, Environmental, Political) are often transformed into SLEPIT (Social, Legal, Economic, Political, Intercultural, Technological).

When beginning a new company or entering a foreign market, this method is extremely useful. It is often used to provide a clear understanding of a situation and related internal and external factors in collaboration with other analytical business tools such as SWOT analysis and Porter's Five Forces.

  • Introduction
  • Components of a PESTLE Analysis
  • What is a PESTLE Analysis used for
  • When to perform PESTLE Analysis
  • How to do a PESTLE Analysis
  • Examples of PESTLE Analysis
  • PESTLE Analysis tips
  • Advantages and Disadvantages of a PESTLE Analysis

Introduction

A PESTLE analysis is a management framework and diagnostic tool. The outcome of the Analysis is to understand critical factors external to the organization which can impact on strategy and influence business decisions.

PESTLE is an acronym for P- Political, E - Economic, S - Social, T - Technology, L - Legal and E - Environmental

Let’s look into each of these factors in detail

P – Political: The primary political factors include the government policies and political stability of the country, other factors may include tax implications, regulations of industry, and restrictions and global trade agreements.

E – Economic: This may include exchange rates, economic growth or decline, globalization, inflation, living costs and interest rates, labor costs and consumer spending.

S – Social: Trends such as lifestyle preferences, societal values and aspirations, career attitudes and work-life balance are social influences. Consumer preferences and buying habits as well as population demographics are also concerned with it.

T – Technology: Recent developments in technological advancement, goods and services, other technological innovations that affect data storage, security levels, disruptive technologies such as smartphones , social networking, automation , robotics and the growing change towards AI ( Artificial Intelligence) are the main technology factors that can influence the organization.

L – Legal: Employment labor law and Employment tribunal decisions impact upon working practices. It is also important to keep up-to-date with all changes in legislation and health and safety regulation.

E – Environmental: The Environmental factors that can impact the organization are political sanctions that govern carbon emissions, shift towards renewable resources such as wind turbines. This area also covers CSR (Corporate Social Responsibility) and ethical sourcing of goods and services which has a direct impact on the procurement and your business supply chain management

Figure: PESTLE Analysis Template

PPoliticalGovernment policy
Political stability
Tax Industry regulations
Global trade agreements and or restrictions
EEconomicExchange rates
Globalization
Economic growth/ decline
Inflation Interest rates
SSocialIncome Distribution
Demographic Influences
Lifestyle Factors
TTechnologyInternational Influences
Changes in Information Technology
Take-up rates
LLegalTax Policies
Industry Regulations
Health and Safety regulations
EEnvironmentalRegulations and Restrictions
Customer attitudes

It provides people with an insight into the external factors that influence their organization. The research is versatile, so it can be used in a variety of different situations by organizations. The findings can be used by individual practitioners and senior managers to direct strategic decision-making.

This Strategic Tool discusses PESTLE's six components and explains what PESTLE analysis is used for, concentrating on the most valuable scenarios. It also provides a PESTLE analysis example (of Amazon.com Inc.).


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Thu Nov 19 , 2020
 Actually, originated as PEST Analysis, this framework is used in the early stages of strategy development to describe the landscape and ecosystem in which a company operates (PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal). Note: STEEPLE (Social, Technological, Economic, Environmental, Legal, Ethical) and DESTEP (Demographic, Economic, Social, […]
reogma|PESTLE Analysis - When beginning a new company or entering a foreign marketreogma|PESTLE Analysis - When beginning a new company or entering a foreign market

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