Business

In part 8, I shared why the PESTLE Analysis is beneficial and how it will help you to understand the “big picture” forces of change that you’re exposed to, and how you can take advantage of the opportunities that they present.

One of the great benefits of this analysis is that it will support you to adapt better to your current business environment.

In today’s blog post, I will share how to do the PESTLE Analysis.

Overview

  • What do you need to cover in your PESTLE Analysis?
  • ⇒ Step 1: Brainstorm these six factors
    • ⇒ Political factors
    • ⇒ Economic factors
    • ⇒ Social factors
    • ⇒ Technological factors
    • ⇒ Legal factors
    • ⇒ Environmental factors
  • ⇒ Step 2: Brainstorm opportunities
  • ⇒ Step 3: Brainstorm threats
  • ⇒ Step 4: Take action
  • Summary

What do you need to cover in your PESTLE Analysis?

The PESTLE Analysis needs to analyze the impact of the following 6 PESTLE factors on the general economy, your specific industry, and your company.

Step 1: Brainstorm the six factors

⇒ Political factors

These factors determine the extent to which a government may influence the economy or a certain industry and your company.

For example, political factors include:

  • ⇒ All government laws, policies, and regulations, such as
    • tax policies, labor, and employment laws
    • environmental laws, consumer protection laws, etc.
  • ⇒ Trade tariffs and controls and all types of restrictions/regulations applicable to local and international trade
  • ⇒ Political stability or instability
  • ⇒ Competition regulations

Questions you could ask to get started:

  • When is the country’s next local, state, or national election?
  • Who are the most likely contenders for power? What are their views on business policy, and on other policies that affect your company?
  • Could any pending legislation or taxation changes affect your business positively or negatively? If so, what could you do to prepare for this change?
  • Are there any other political factors that might change?

⇒ Economic factors

These factors are determinants of an economy’s performance that directly can impact your company or industry. 

For example, economic factors include:

  • ⇒ Macro-economic factors: inflation rate, interest rates, growth rates
  • ⇒ Micro-economic factors: availability of credit and of other sources of capital

Such factors will decide the direction of a country’s economy and how it may affect your company.

Questions you could ask to get started:

  • How stable is the current economy? Is it growing, stagnating, or declining?
  • Is the customer´s income rising or falling? How is this likely to change in the next few years?
  • What is the unemployment rate? How difficult is it to build a skilled workforce?
  • How easy have consumers and businesses access to credit? How will this affect your company?
  • Are there any other economic factors that you should consider?

⇒ Social-cultural factors

These factors explore the social environment of the market and assess determinants such as:

  • ⇒ Buying behavior: buying habits, attitudes towards product quality, customer service, ethical and environmental concerns, and lifestyles.
  • ⇒ Cultural trends: health consciousness, cultural norms, and values, etc.
  • ⇒ Demographics: population size and growth rate, birth rates, death rates, etc.

Because society is an external force, it will always have an impact on your company. Being aware of these social factors such as individual lifestyles, cultural implications, domestic structures, etc. will help you better understand the market and your customers.

Questions you could ask to get started:

  • What generational shifts in attitude could affect your company?
  • What employment patterns, job market trends, and attitudes toward work can you observe? What are the differences in any age group?
  • What social attitudes and social taboos could affect your business?
  • What are your society’s levels of health, education, and social mobility? How are these changing, and what impact does this have?
  • Are there any other socio-cultural factors likely to affect your business?

⇒ Technological factors

Technological factors are the key driver of the change and transformation of several industries in the world.

For example, the innovations in technology may affect the operations of your industry and market favorably or unfavorably. Keep close attention to all technological factors such as new innovations, automation, and R&D activity. It will help your company to stay ahead of your competitors.

Questions you could ask to get started:

  • What are the new technologies you could start using?
  • What are the new technologies that could radically affect your work or your industry?
  • Do any of your competitors have access to new technologies that could redefine their products?
  • What technology could threaten a key product of your company? Could you master that technology and improve your product?
  • Are there any other technological factors that you should consider? 

⇒ Environmental factors

These factors are determined by the surrounding environment and they are very important in certain industries, such as tourism, farming, agriculture, energy, and insurance. 

For example, environmental factors include:

  • ⇒ Climate and weather
  • ⇒ Natural disasters, air, and water pollution
  • ⇒ Geographical location, as limiting or enabling factor of certain business activities
  • ⇒ Environmental policies, recycling standards, attitudes towards green products 

Environmental factors could affect the trades, consumer demands, and even product development in some industries.

Questions you could ask to get started:

  • What environmental factors impact your industry and company?
  • Are there environmental pollution issues you need to be aware of, such as water, and air pollution?
  • What are the environmental policies you have to comply with?
  • Are there any other environmental factors you should be aware of and consider?

⇒ Legal factors

Local laws affect the business environment and making it easier or more difficult to make business in that country.

For example, relevant laws to be analyzed include: 

  • ⇒ Antitrust laws
  • ⇒ Copyright and patent laws.
  • ⇒ Customer and data protection laws
  • ⇒ Discrimination laws
  • ⇒ Employment laws
  • ⇒ Health and safety laws

Your company will need to comply with these legislative changes, if applicable.

Questions you can ask to get started:

  • What legal factors are likely to impact your industry and company?
  • What legislative changes are very likely to occur?
  • What changes in laws should you be aware of to support the future success of your company?
  • Are there any other legal factors you should be aware of?

Step 2: Brainstorm opportunities

Once you’ve identified the changes that are taking place in your business environment, it’s time to look at each change.

  • Brainstorm the opportunities that could open up for you.
  • Where do you see significant opportunities?
  • For example, could it help you develop new products, and create new markets?

Step 3: Brainstorm threats

  • It’s also important to think about how these changes could undermine your business.
  • If you understand these threats early enough, you may be able to minimize their impact.
  • Where did you identify significant risks?

Step 4: Take action

  • Now take appropriate action to exploit these opportunities for the benefit of your company to manage or eliminate these identified risks.

Summary

  • Key Point #1: PESTLE analyzes six factors that will shape your business environment. 
  • Key Point #2: PESTLE helps to draw conclusions about the significant forces of change.
  • Key Point #3: PESTLE provides a context for more detailed planning, within which you will be able to minimize risk and take full advantage of the opportunities.

Supporting you

I´m available to support you through this difficult time by re-imagine your business. A PESTLE analysis will help you in your decision-making process to determine if you should do business in that country, state, or region, and focuses on the external factors you´ll need to adapt your strategy too.

I will work with you and your leadership team to analyze the company´s six PESTLE factors. We will develop a tailored strategy that takes into account these six factors. The goal is to get your business fast running at its peak performance.

Contact me for a complimentary 30-minute strategy session:

https://nextlevelcoach.as.me/schedule.php

Coming up next month…

In my next blog post, I’ll share how to conduct a STEEPLE Analysis.

Stay tuned!

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