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« business coaching director ceo

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The PESTLE analysis tool

By support - Last updated: Monday, January 29, 2007 - Save & Share - 3 Comments
3
tweets
PEST/ PESTLE Analysis Tool -History and retweet

Templates
- ETPS – PESTEL – PESTLEE – PESTLIED – SLEPT – STEEPLE – STEP – STEPE – PEST-G – PEST-E -

The Environment Scan – Environmental Organizational Scanning

PESTLE Analysis micro site – History – Introduction – Templates – HR example – Schools & Education

Welcome to our new micro site on the PESTLE analysis.

This popular page has now been improved and is split into more easily digested chunks. Lets us know your
comments and feedback. Use the menu above to navigate through this PESTLE analysis micro site.

PESTLE Analysis micro site -

Home/ History of Pest analysis – Introduction to the PESTLE analysis – PESTLE analysis templates – HR
example of a PESTLE application – PESTLE analysis in Schools & Education

This page has been relocated to our new pestle micro site – where it is easier to navigate and print the elements of
interest – please go to – http://rapidbi.com/pestle/

This is now old content please follow the navigation at the top of the page for our new content

The PEST or PESTLE Analysis

Originally designed as a business environmental scan, the PEST or PESTLE analysis is an analysis of the external
macro environment (big picture) in which a business operates. These are often factors which are beyond the
control or influence of a business, however are important to be aware of when doing product development,
business or strategy planning.

This page has been developed to help and support anyone with activities or projects which require use of the
PESTLE analysis tool to undertake an environmental scan of an organizations operating environment.

Visit the article home page for all of our articles and content

• Jump straight to the FREE PESTLE Template (below)

• PESTLE Analysis on an HR department or other internal function
• Download PDF versions of these templates
• History of PEST (LE)
• NEW page on PESTLE analysis for schools and education

It is important to take into account PESTLE factors for the following main reasons:

09/03/2011
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• Firstly, by making effective use of PESTLE analysis, you ensure that what you are doing is aligned
positively with the powerful forces of change that are affecting our working environment. By taking
advantage of change, you are much more likely to be successful than if your activities oppose it

• Secondly, good use of PESTLE analysis helps you avoid taking action that is likely to lead to failure for
reasons beyond your control
• Thirdly, PESTLE is useful when you start a new product or service. Use of PESTLE helps you break free of
assumptions, and helps you quickly adapt to the realities of the new environment

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History of PEST

So where did the term PEST or PESTLE derive? What were the origins?

The term PESTLE has been used regularly in the last 10+ years and its true history is difficult to establish.

From our research, the earliest know reference to tools and techniques for ‘Scanning the Business Environment’
appears to be by Francis J. Aguilar (1967) who discusses ‘ETPS’ – a mnemonic for the four sectors of his
taxonomy of the environment: Economic, Technical, Political, and Social.

Shortly after its publication, Arnold Brown for the Institute of Life Insurance (in the US) reorganized it as
‘STEP’ (Strategic Trend Evaluation Process) as a way to organise the results of his environmental scanning.

Thereafter, this ‘macro external environment analysis’, or ‘environmental scanning for change’, was modified yet
again to become a so-called STEPE analysis (the Social, Technical, Economic, Political, and Ecological
taxonomies).

In the 1980s, several other authors including Fahey, Narayanan, Morrison, Renfro, Boucher, Mecca and Porter
included variations of the taxonomy classifications in a variety of orders: PEST, PESTLE, STEEPLE etc. Why
the slightly negative connotations of PEST have proven to be more popular than STEP is not known. There is no
implied order or priority in any of the formats.

Some purists claim that STEP or PEST still contain headings which are appropriate for all situations, other claim
that the additional breakdown of some factors to help individuals and teams undertaking an environmental scan.

Quite who and when added what elements to the mnemonic is a mystery, but what we do know is that the actual
order and words contained are common to certain parts of the world and streams of academic study. The term
PESTLE is particularly popular on HR and introductory marketing courses in the UK. Others favour PEST, STEP
or STEEPLE.
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Introduction to The PESTLE Analysis tool

PESTLE analysis is a useful tool for understanding the “big picture” of the environment in which you are
operating, and the opportunities and threats that lie within it. By understanding the environment in which you
operate (external to your company or department), you can take advantage of the opportunities and minimize the
threats.

Specifically the PEST or PESTLE analysis is a useful tool for understanding risks associated with market
growth or decline, and as such the position, potential and direction for a business or organization.

09/03/2011
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For the purposes of this page we will focus on the PESTLE variation of the acronym.

The PESTLE Analysis is often used as a generic ‘orientation’ tool, finding out where an organization or product
is in the context of what is happening out side that will at some point effect what is happening inside an
organization.

A PESTLE analysis is a business measurement tool, looking at factors external to the organization. It is often
used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and Threats analysis).

PESTLE is an acronym for

Political, Economic, Social, Technological, Legal and Environmental factors,

which are used to assess the market for a business or organizational unit strategic plan

The PESTLE analysis headings are a framework for reviewing a situation, and can also be used to review a
strategy or position, direction of a company, a marketing proposition, or idea. There are many variants on this
model including PEST analysis and STEEPLE analysis.

Completing a PESTLE analysis can be a simple or complex process. It all depends how thorough you need to
be. It is a good subject for workshop sessions, as undertaking this activity with only one perspective (i.e. only one
persons view) can be time consuming and miss critical factors.

Use PESTLE analysis for business and strategic planning, marketing planning, business and product
development and research reports.

The PESTLE template below includes sample questions or prompts, whose answers are can be inserted into the
relevant section of the table.

The questions are examples of discussion points, and should be altered depending on the subject of the analysis,
and how you want to use it.

Make up your own PESTLE questions and prompts to suit the issue being analyzed and the situation (i.e. the
people doing the work and the expectations of them).

It is important to clearly identify the subject of a PESTLE analysis (that is a clear goal or output requirement),
because an analysis of this type is multi faceted in relation to a particular business unit or proposition – if you
dilute the focus you will produce an unclear picture – so be clear about the situation and perspective that you use
PESTLE to analyze.

A market is defined by what is addressing it, be it a product, company, organization, brand, business unit,
proposition, idea, etc, so be clear about how you define the market being analyzed, particularly if you use
PESTLE analysis in workshops, team exercises or as a delegated task. The PESTLE subject should be a clear
definition of the market being addressed, which might be from any of the following standpoints:

• A company looking at its market

• A product looking at its market
• A brand in relation to its market
• A local business unit or function in a business
• A strategic option, such as entering a new market or launching a new product
• A potential acquisition
• A potential partnership
• An investment opportunity

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Be sure to describe the subject for the PESTLE analysis clearly so that people contributing to the analysis, and
those seeing the finished PESTLE analysis, properly understand the purpose of the PESTLE assessment and
implications.

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PESTLE analysis template

Other than the main headings, the questions and issues in the template below are examples and not exhaustive –
add your own and amend these prompts to suit your situation, the experience and skill level of whoever is
completing the analysis, and what you aim to produce from the analysis.

The context upon which a PESTLE analysis is undertaken can help to determine how to interpret facts and
information discovered.

PEST/ PESTLE Analysis on ____________________(organization name) SWOTSWOT Context _____________

Analysis ____________ view

PESTLE Analysis factors Your notes Potential Implication and importance

Impact:

The list below is just to get About your H – HighM – Time Type:Positive Impact:Increasi
you started. Remember to put organization.How MediumL – Frame:0 +Negative - >Unchanged =
these, and others that you add might the factors Low –6
in the context of your listed on the left months6 Unknown Decreasing <
organization or business.For impact your U– – 12
example if you are a small business or part Undetermined months Unknown
private company the of the
behaviours of a Wall Mart / organization? 12 – 24
Tesco or other large months
international player may well
impact on you.If you are a 24 +
local authority, government months
changes will change your
priorities. In the NHS changes
to treatments and public
attitudes will also impact etc.

Political – SWOT

• Trading policies
• Funding, grants and
initiatives
• Home market
lobbying/pressure
groups
• International pressure
groups
• Wars and conflict
• Government policies
• Government term and
change
• Elections
• Inter-country
relationships/attitudes

09/03/2011
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• Terrorism
• Political trends
• Governmental
leadership
• Government structures
• Internal political issues
• Shareholder/
stakeholder needs/
demands
• ___________________
• ___________________
• ___________________
• ___________________
• ___________________

Economic – SWOT

• Home economy
situation
• Home economy trends
• Overseas economies
and trends
• General taxation issues
• Taxation changes
specific to
product/services
• Seasonality/weather
issues
• Market and trade cycles
• Specific industry
factors
• Market routes and
distribution trends
• Customer/end-user
drivers
• International
trade/monetary issues
• Disposable income
• Job
growth/unemployment
• Exchange rates
• Tariffs
• Inflation
• Interest and exchange
rates
• Consumer confidence
index
• Import/export ratios
• Production level
• Internal finance
• Internal cash flow
• ___________________
• ___________________
• ___________________

09/03/2011
 Page 10 of 16

• ___________________
• ___________________

Social – SWOT

• Consumer attitudes and

opinions
• Media views
• Law changes affecting
social factors
• Brand, company,
technology image
• Consumer buying
patterns
• Major events and
influences
• Buying access and
trends
• Ethnic/religious factors
• Advertising and
publicity
• Ethical issues
• Demographics (age,
gender, race, family
size,)
• Lifestyle changes
• Population shifts
• Education
• Trends
• Fads
• Diversity
• Immigration/emigration
• Health
• Living standards
• Housing trends
• Fashion & role models
• Attitudes to work
• Attitudes to people
doing certain types of
work
• Leisure activities
• Occupations
• Earning capacity
• Staff attitudes
• Management style
• organizational culture
• Changes to education
system
• ___________________
• ___________________
• ___________________
• ___________________
• ___________________

09/03/2011
 Page 11 of 16

Technological – SWOT

• Competing technology
development
• Research funding
• Associated/dependent
technologies
• Replacement
technology/solutions
• Maturity of technology
• Manufacturing maturity
and capacity
• Information and
communications
• Consumer buying
mechanisms/technology
• Technology legislation
• Innovation potential
• Technology access,
licensing, patents
• Intellectual property
issues
• Global communications
• Inventions
• Innovations
• New discoveries
• Research
• Energy
uses/sources/fuels
• Communications
• Rate of obsolescence
• Health (pharmaceutical,
equipment, etc.)
• Manufacturing
advances
• Information technology
• Internet
• Transportation
• Bio-tech
• Genetics

• Waste
removal/recycling
• Email
• M-learning
• E-learning
• Collaboration tools
• Software changes
• RSI
• ___________________
• ___________________
• ___________________
• ___________________
• ___________________

09/03/2011
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Additional split of information if doing a PESTLE analysis rather than a PEST analysis:

Legal – SWOT

• Current legislation
home market
• Future legislation
• European/international
legislation
• Regulatory bodies and
processes
• Environmental
regulations
• Employment law
• Consumer protection
• Industry-specific
regulations
• competitive regulations
• ___________________
• ___________________
• ___________________
• ___________________
• ___________________

Environmental – SWOT

• Ecological
• Environmental issues
◦ International
◦ National
◦ Local
• Environmental
regulations
• Customer values
• Market values
• Stakeholder/ investor
values
• Staff attitudes
• Management style
• organizational culture
• Staff morale
• Staff engagement
• Global factors
• EU based factors
• ___________________
• ___________________
• ___________________
• ___________________
• ___________________

top

09/03/2011
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Remember this is only a tool. Call it what you like – use whatever factors you feel are appropriate. Other
variations include:

• PEST analysis (STEP analysis) - Political, Economic, Sociological, Technological

• PESTLE/ PESTEL analysis- Political, Economic, Sociological, Technological, Legal, Environmental;
PESTEL analysis
• PESTEL analysis- Political, Economic, Sociological, Technological, Environmental, Labour (Labor)
related; PESTEL analysis (rare no references available)
• PESTLIED analysis- Political, Economic, Social, Technological, Legal, International, Environmental,
Demographic
• STEEPLE analysis – Social/Demographic, Technological, Economic, Environmental, Political, Legal,
Ethical
• SLEPT analysis – Social, Legal, Economic, Political, Technological
• STEPE analysis – Social, Technical, Economic, Political, and Ecological
• ETPS analysis – Economic, Technical, Political and Social – Scanning the business environment

Choose the acronym that most suits you or your organization.

top

Next Step

When you have identified the factors that may impact your organization, in column 2 list HOW they would
impact on your organization. When this is complete, in column 3 indicate the extent to which each factor is a
risk.

As a rule of thumb, for every HIGH risk you identify you should have at least 10 MEDIUM and 20 LOW risk
item. If you identify more high risks than low risks it may be worth re-visiting your thoughts on what may or may
not impact your organization. Then look at the relative importance and implication of each factor.

When you have done this you are ready to start to populate a SWOT analysis (see below).

top

Action Planning

When you have collated the relevant data you need to develop an action plan with SMART objectives (Specific
measurable achievable relevant time-bound or SMARTER objectives)

top

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models

PESTLE Analysis on an HR department or other internal function

While the PEST or PESTLE analysis is primarily aimed at looking at the external environment of an organization,
many HR courses ask students to use the PEST or PESTLE analysis model to look at their own function. In this
context we need to imagine that the department (HR) is an organization in its own right and look outside. Factors
to include in your analysis may include the following:

• Political
◦ What is the culture of the organization,
◦ How is the HR function viewed by other functions?
◦ Who are the political champions of HR (or its adversaries)?

09/03/2011
 Page 14 of 16

◦ Shareholder views
• Economic
◦ What is the budgetary position of the department,
◦ Is more money available?
◦ Are our customers likely to spend more or less money on the services we offer?
◦ What is happening to the financial status of the organization
◦ Interest rates
◦ Inflation
◦ Salary trends in the sector
• Sociological
◦ Other departmental attitudes to HR
◦ Population shifts (age profile)
◦ Education
◦ Fads
◦ Diversity
◦ Immigration/emigration
◦ Health
◦ Living standards
◦ Housing trends
◦ Fashion & role models
◦ Age profile
◦ Attitudes to career
• Technological
◦ What changes may be coming our way?
◦ What new technology/ systems,
◦ How do we record attendance, performance? how might this change?
◦ Use of and encourage home working?
◦ Communications technologies
◦ changes of technology that will increase/ reduce the need for recruitment
◦ changes to HR software
• Legal
◦ What is happening in our sector that will impact what we do?
◦ Minimum wage,
◦ Working time,
◦ Food stuffs,
◦ Under 18 working,
◦ Occupational/ industrial Training etc.
◦ What changes will impact the services of the organization
• Environmental
◦ Staff morale
◦ Staff engagement
◦ Need to reduce storage needs
◦ Management attitudes (inside dept/ function)
◦ Organizational culture

ttop

This is only a sample of the types of issues you may include. Use the topics listed in the template above to give
you ideas and inspire you, just relate them to the rest of your organization and your ‘customers’.

NEW page on PESTLE analysis for schools and education

On to SWOT analysis

To take the PESTLE analysis forward you can integrate the results into your SWOT.

09/03/2011
 Page 15 of 16

The outputs from the BIR/ SWOT will provide you with your internal strengths and weaknesses.

Have a look at the HIGH impacts from the PESTLE. Some will be positive in nature, others will be negative. List
these on your SWOT analysis under OPPORTUNITIES and THREATS.

The PESTLE model is a useful environmental scan as part of a diagnostic process. The PESTLE analysis tool can
be used in association with the Business Improvement Review (BIR) – a highly structured and holistic SWOT
tool. The PESTLE models can help to identify the context in which a business operates and provide a context for
change. A PESTLE analysis can provide a valuable agenda upon which to use a Business Improvement Review
(BIR) to help identify the strengths and weaknesses (SWOT) of an organization, as apart of an organizational
change process. Click here for more information. Need to write SMART objectives? Need to use Management
Models

Have you found this page of value? Need more details/ ideas? Your feedback is welcomed.

Based upon information from many sources. No copyright over the model or acronyms are assumed. This page is
provided for educational purposes only. RapidBI Ltd cannot accept any responsibility for the actions taken using
this or any of the tools provided on this site. Please note this page is updated on a regular basis. The more
feedback we get the more we will develop this and similar pages for people studying CIPD and other HR and
management programmes. CTP, CPP etc

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No related posts.

Posted in Created Articles, Historical, Management, pestle • Top Of Page

3 Responses to “The PESTLE analysis tool”

Trackback from Mike Morrison
Time February 5, 2011 at 13:39

Blog post – PEST/ PESTLE Analysis Tool – History & Templates http://bit.ly/fQk1bp

Trackback from Deita Rolano

Time February 5, 2011 at 13:44

RT @RapidBI: Blog post – PEST/ PESTLE Analysis Tool – History & Templates http://bit.ly/fQk1bp

Trackback from theLBSS

Time February 23, 2011 at 01:00

Random article from @rapidbi blog- http://rapidbi.com/created/the-PESTLE-analysis-tool/

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