The PESTLE Analysis

Evaluating the External Environment

 PESTLE

 A PESTLE Analysis is a useful tool for

understanding the industry and is often used
in conjunction with a SWOT analysis to
assess the situation of an individual business.

 PESTLE stands for “Political, Economic,

Social, Technical, Legal and Environmental”
factors.
 Political

 Current taxation policy

 Future taxation policy
 The current and future political support
 Grants, funding and initiatives
 Trade bodies
 Effect of wars or worsening relations
with particular countries
 Economic

 Overall economic situation

 Strength of consumer spending
 Current and future levels of government
spending
 Ease of access to loans
 Current and future level of interest rates,
inflation and unemployment
 Specific taxation policies and trends
 Exchange rates
 Social

 Demographics
 Lifestyle patterns and changes
 Attitudes towards issues such as
education, corporate responsibility and
the environment
 Social mobility
 Media views and perceptions
 Ethnic and religious differences
 Technological

 Relevant current and future technology

innovations
 The level of research funding\
 The ways in which consumers make
purchases
 Intellectual property rights and copyright
infringements
 Global communication technological
advances
 Legal

 Legislation in areas such as

employment, competition and
health & safety
 Future legislation changes
 Changes in European law
 Trading policies
 Regulatory bodies
 Environmental

 The level of pollution created by the

product or service
 Recycling considerations
 Attitudes to the environment from the
government, media and consumers
 Current and future environmental
legislative changes
 The SWOT Analysis

Evaluating Strengths, Weaknesses,

Opportunities and Threats
 Strengths

 What’s different about your business?

◼ What do you do well?
◼ What unique resources or knowledge do you
have?
◼ People, resources, innovation, ideas,
marketing, operations, finance
 Think from an internal and external
perspective. For example, if all your
competitors have a high quality product
then having a high quality product is not
a strength, it’s a necessity.
 Weaknesses

 What do your competitors have that you

don’t?
◼ What areas can you improve at?
◼ What weaknesses do people perceive you as
having?
◼ People, resources, innovation, ideas,
marketing, operations, finance
 Perception is just as important as the
reality here. Do customers perceive you
as having certain weaknesses? Where do
you think you could do better?
 Opportunities

 What trends present an opportunity to

you?
 Are there any complementary products
which you could look to expand into?
 Are there any potentially beneficial
technological or legal developments?
 PESTLE
 Refer back to your strengths and look at
whether you can exploit any
opportunities through using them.
 Threats

 What legal and technological

developments could threaten your
business?
 Are any new entrants likely?
 What does your competition plan to do?
◼ PESTLE
 Threats may often arise as a result of
your weaknesses. Assessing your
weaknesses will help you identify future
threats and assess how to minimize
them.