Strategic planning for business growth
PESTLE analysis example
Guide
PESTLE analysis is a fundamental tool for business strategy and planning. It is a method
of assessing your business environment and its possible impact on the performance of
your company.
PESTLE is an acronym that stands for six external factors affecting your business:
political, economic, sociological, technological, legal and environmental. Each of these
can have a profound effect on your business and varying implications, for example, in
terms of:
duration of impact - short term or long term
type of change - positive, negative or unknown
rate of impact - increasing, decreasing, unchanged or unknown
importance - critical, important, unimportant or unknown
Example of PESTLE analysis
The following PESTLE analysis example clarifies how the six external factors work and
what type of information you should include in your analysis. This example scenario
involves the overseas sale of a product.
Category Political Economic Social Technological Legal Environ
eg cultural eg legislative
eg emergence of
eg norms, issues, such
innovative eg sustain
international eg current UK attitudes to as consumer
technologies waste
trading tariffs, economic product, protection
affecting the managem
Possible restrictions, situation, currency consumer laws, health
production, rules and
factors visa inflation, interest preferences, and safety
marketing or sale regulatio
requirements, rates, taxation age and laws,
of a product, green pra
price control, level, etc gender licensing
automation of etc
etc distribution, regulations,
processes, etc
etc etc
eg - possible eg - strength of eg - can eg - will the
eg - will
trade barriers overseas intellectual product eg - pollu
Business product be
to protect economies versus property rights be comply or be implicati
impact accepted
domestic UK may affect protected allowed into transport
overseas?
suppliers price/profitability overseas? the market?
6-12 months
Time frame unknown 6-12 months 0-6 months 0-6 months n/a
(possibly longer)
Type of
negative unknown unknown negative negative possibly
impact
Rate of increasing unknown - unknown unchanged unchanged unknown
Category Political Economic Social Technological Legal Environ
dependent on the
economy, and
impact
other countries'
economies
Importance unknown important critical important critical unknown
Advantages of PESTLE analysis
By helping you to understand how external factors affect your businesses, PESTLE can
help you:
determine their long-term effect on the performance and activities of your
business
review any strategies you have in place
work out a new direction, product or plan for your business
identify solutions to problems
gain strategic advantage on competitors
evaluate the risks associated with markets you're interested in
PESTLE is an extended version of PEST analysis. It is often used in collaboration with
other analytical business tools like the SWOT analysis and Porter's Five Forces to give a
clear understanding of a situation and related internal and external factors.