The PESTLE analysis is an acronym for the all-round macro-level study of external factors which can and do affect a(ny) business. This study makes account for those factors that may either benefit or hinder the efficiency and smooth functioning of an(y) organization. These factors are political (P), environmental (E), Social (S), technological (T), legal (L) and environmental (E). The PESTLE analysis is also spelt as PESTEL. Sometimes the last two factors, that is legal and environmental, are not taken into account whereby referring to this study as simply PEST.
Unlike the SWOT analysis, the PESTLE is a study of the external factors only of the market and prevailing conditions which can help the company or organisation gain a feel of the same. These factors are analysed and assessed so as to understand how these external factors, which are beyond the correction of the organisation, can directly or indirectly affect the company and its functioning. This helps in adequate planning and marketing so as to assure maximum overturn.
The PESTLE study is carried out especially at the start of a new venture and is reviewed form time to time (yearly or bi-yearly). This analysis helps an organisation select and understand their target groups and its demands, develop a business blueprint as well as work on their competitive advantage over their competitors. This in turn helps the PESTLE study become more engaging and broad thereby forming a vicious circle. The more detailed the study is, the better it is for the business.
Aside from gaining positive realisations, this perusal can help avoid many errors, big or small. It helps the company overcome factors which act or may act as hurdles in their path to success. This requires the identification and assessment of factors which might be affecting the position of a business or company, reasons for growth and especially decline and setbacks.
Since the PESTLE survey is such a comprehensive and expansive study, it helps the company and its employees remain up to date with the latest developments and trends in all aspects of concern such as government policies, legal systems, tax policies, growth rate, new technologies and environmental laws to name a few. For example, if a company is branching out to another state or country, they need to re-examine their policies and activities so as to fit the legal framework of the new location.
Reassessment is a major key to avail the maximum benefits of the PESTLE study structure. Irrespective of the company’s performance, the external factors are always in momentum. Sometimes these factors act and affect the business(es) independently or in combination. Sometimes these factors may affect each other which require a large-scale reinvestigation on behalf of the larger bodies governing such factors for example governments, NGOs, trade unions and international organization. Thus it is imperative for any business to keep updating their systems from time to time so as to stay at the top of the game. Since external factors cannot be shaped by them but what can be done is that they adjust their structure in such a way that the external factors (largely) are in their favour.
Like the SWOT analysis, PESTLE also requires extensive and intensive brainstorming from all sectors of the organization. This helps not only in team-building and creative thinking but also helps brings together various sections which may not otherwise be interacting with each other. It also makes room for the employment and opinions of analysts and specialists from various spheres which thereby encourage employment and creation of new jobs.
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