PESTEL Analysis

Political factors

 Government stability/instability

 Corruption level

 Tax policies

 Freedom of press

 Government regulation and deregulation

 Special tariffs

 Political action committees

 Government involvement in trade unions and agreements

 Competition regulation

 Voter participation rates

 Amount of government protests

 Defense expenditures

 Level of government subsidies

 Bilateral relationships

 Import-export regulation/resctrictions

 Trade control

 Lobbying activities

 Size of government budgets

Economic factors

 Growth rate

 Interest rate
  Inflation rate

 Exchange rate

 Availability of credit

 Level of disposible income

 Propensity of people to spend

 Federal government budget deficits

 Gross domestic product trend

 Unemployment trend

 Stock market trends

 Price fluctuations

Social factors

 Population size and growth rate

 Birth rates

 Death rates

 Number of mariages

 Number of divorces

 Immigration and emigration rates

 Life expectancy rates

 Age distribution

 Wealth distribution

 Social classes

 Per capita income

 Family size and structure

 Lifestyles

 Health consciousness
  Average disposable income

 Attitude towards government

 Attitude towards work

 Buying habits

 Ethical concerns

 Cultural norms and values

 Sex roles and distribution

 Religion and beliefs

 Racial equality

 Use of birth control

 Education level

 Minorities

 Crime levels

 Attitudes towards saving

 Attitude towards investing

 Attitudes towards retirement

 Attitudes towards leisure time

 Attitudes towards product quality

 Attitudes towards customer service

 Attitudes towards foreign people

Technological factors

 Technology incentives

 Automation

 R&D activity

 Technological change
  Access to new technology

 Level of innovation

 Technological awareness

 Internet infrastructure

 Communication infrastructure

 Life cycle of technology

Environmental factors

 Weather

 Climate

 Environmental policies

 Climate change

 Pressures from NGO’s

 Natural disasters

 Air and water pollution

 Recycling standards

 Attitudes towards green products

 Support for renewable energy

Legal factors

 Discrimination laws

 Antitrust laws

 Employment laws

 Consumer protection laws

 Copyright and patent laws

 Health and safety laws

 Education laws
  Consumer protection laws

 Data protection laws

Both SWOT and PESTEL analyses are valuable tools for small business managers to understand and
evaluate the pros, cons and feasibility of business decisions. They can be applied when starting or
reorganizing a small business. Or, other projects such as launching new products/services, marketing
campaigns or new production methods. PESTLE analysis concentrates on the external environmental
factors and should preferably be done before the SWOT analysis. The results from the PESTLE analysis
are added to the threats and opportunities sections of the SWOT analysis. Using both PESTEL and SWOT
produce a more comprehensive evaluation and a better decision.

WHY USE PESTLE ANALYSES AND WHAT IS THE BENEFITS?

A PESTEL analysis:

 Provides a cost-effective method and simple structure to conduct a systematic and thorough

evaluation of the external macro environment.

 Encourages and promotes a strategic thinking mindset and brings together owners and key
employees with a common goal. It helps you to evaluate how your strategy fits into the broader
external environment and plan strategically.

 Creates better awareness of crucial external factors that influence your small business and
helps you to understand why and how much of an impact the external macro environment will
have.
  Provides insight for valuable business opportunities and makes you more alert to potential
threats in the external environment.

 Creates a better understanding of your small business’ position now and in the future within the
external environment and whether your business is weak or strong to cope with it.

 Helps to be more effective and profitable by evaluating the impact of business decisions before
implementing them, avoiding costly mistakes.

 It facilitates an understanding of the wider business environment

 It encourages the development of external and strategic thinking.

 It can enable an organisation to anticipate future business threats and take action to avoid or
minimise their impact.

 It can enable an organisation to spot business opportunities and exploit them fully.

 It’s important for our organisations to analyse the environment in which they operate, to help
them make effective strategic decisions.

SWOT is the short form of Strengths Weakness Opportunities and Threat whereas PESTLE defines the
Political Economic Social Technological Legal and Environmental factors affecting business. The SWOT
and PESTLE analysis it is possible for companies to do the detailed analysis for creating strategic plans.

SWOT and PESTLE analysis is first done at the preliminary stages of a business planning process. SWOT
analysis is usually carried out to find the competitive advantage over other companies. What are the
strong and weak points of the company with respect to the competitors can find out through SWOT
analysis. Analysis of the Opportunities and threats that may occur which will affect the company in the
long and short term also can be analyzed through SWOT analysis. Through PESTLE analysis the external
factors which affect the business environment can be analyzed.

Most organizations also do SWOT and PESTLE analysis on a yearly basis to get data related to the year.
This is particularly helpful in doing a reassessment and finding out the emerging opportunities and
threats. Also, yearly environmental conditional changes can also be analyzed through this. Technological
advancements and economic changes can also be seen through this.

The SWOT analysis is an extremely useful tool for understanding and decision-making for all sorts of
situations in business and organizations. Information about the origins and inventors of SWOT analysis
is below. The SWOT analysis headings provide a good framework for reviewing strategy, position and
direction of a company or business proposition, or any other idea.

To be successful, businesses must utilize their strengths, improve upon their weaknesses, and guard
against their external threats and residual, internal vulnerabilities. Simultaneously, companies need to
evaluate their external environment to identify and exploit new opportunities before their competitors.
SWOT analysis aids in this process.
A company can deal with these vulnerabilities in several ways. First, it can fix the recognized flaw.
Second, it can protect its operations through strategies that conceal or prevent competitors from taking
advantage of the defect. Finally, the business can act aggressively towards its competitors to divert their
attention from the defect.