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PESTEL ANALYSIS
PESTEL Analysis is a popular method of examining the many different external
factors affecting an organization. The acronym PESTEL stands for the following:
• Taxation policy
• Privatisation
Deregulation
• International trade regulations
• General initiatives
• Government stability
• International stability
• Money supply
• Credit control
• Financial markets
• Inflation
• Competitors pricing
• Globalization
• Mobility
• Income distribution
• Population demographics
• IT Development
• Software upgrades
• Employment law
• Monopolies commission
• Pollution problems
• Planning permissions
• Waste disposal
• Noise controls
One of the main problems, with these external factors, is that we have little or no
control over them.
Let’s suppose we are making and selling beer, and then on one day in April we
switch on the television and the Chancellor of the Exchequer announces an
increase in tax on alcoholic drinks.
Or we are in a property development business and one day in June we open the
newspaper and see:
"PROPERTY BUBBLE BURSTS!"
Another problem with these external PESTEL factors is that they are continuously
changing.
Example
Bridges Ltd.
A small, plant and equipment hire company. They began in business five years ago,
hiring tools and equipment to both professional and domestic customers, for
general building maintenance and repair, as well as gardening and landscaping.
A simple PESTEL analysis carried out by the owners of Bridges Ltd. revealed the
following:
Political
• Local councils offering increased grants for repair of older properties.
Economic
• Predictions that the housing boom is coming to an end.
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