PESTLE Analysis is a strategic tool used by entrepreneurs  Income level

and businesses to identify and evaluate the external factors  Economic growth
that may affect the success or failure of a business. These Guide Questions
factors are outside the control of the business, but they can  Are prices increasing?
influence its operations, profitability, and future growth.  Do people have jobs?
 Can people afford to buy products?
The word PESTLE stands for:  Are loans expensive?
 P – Political Localized Example
 E – Economic Example 1: Inflation
 S – Social The price of rice increased from ₱45 to ₱60 per kilo.
 T – Technological Because of inflation:
 L – Legal  Families buy less food.
 E – Environmental  Restaurants increase food prices.
 Small eateries earn less profit.
By analyzing these six factors, business owners can better
understand the business environment, recognize Example 2: Coconut Farmer
opportunities, prepare for challenges, and make informed When coconut prices decrease,
decisions before starting or expanding a business. Farmers earn less money.
As a result:
P – POLITICAL FACTORS  They spend less.
Simple Meaning  Local stores also experience lower sales.
Political factors refer to government actions, policies,
laws, and decisions that can affect businesses. S – SOCIAL FACTORS
Simply put, Simple Meaning
The government creates rules, taxes, and programs that Social factors refer to the behavior, culture, lifestyle,
businesses must follow. traditions, and preferences of people.
Government decisions may either help businesses grow or Simply put,
make it more expensive to operate. Businesses must understand what customers like, need,
It includes: and value.
 Government policies It includes:
 Political stability  Population
 Taxes  Age
 Trade policies  Lifestyle
 Labor laws  Education
 Government permits  Culture
 Minimum wage  Health awareness
Guide Questions  Consumer preferences
 Are there new government policies? Guide Questions
 Has the government increased taxes?  What do customers like?
 Is the country politically stable?  What are the latest trends?
 Does the government support small businesses?  Are people becoming more health-conscious?
Localized Example  What products are popular?
Example 1: Sari-sari Store Localized Example
The Philippine government increased the tax on sugary Example 1: Milk Tea Shop
drinks through the TRAIN Law. Many students love milk tea.
Result: Because demand is high,
 Soft drinks became more expensive. many milk tea shops open near schools.
 Customers bought fewer soft drinks.
 Store owners had to adjust their prices. Example 2: Healthy Lifestyle
More Filipinos now prefer healthy foods.
Example 2: Rice Business A local entrepreneur starts selling:
If the government imports more rice from other countries,  Fresh fruit shakes
rice prices may decrease.  Vegetable salads
Result:  Fresh juices
 Consumers benefit from cheaper rice. Business becomes successful because customer preferences
 Local rice farmers may earn less income. changed.

E – ECONOMIC FACTORS T – TECHNOLOGICAL FACTORS

Simple Meaning Simple Meaning
Economic factors refer to the condition of the country's Technological factors refer to new inventions, machines,
economy that affects businesses and consumers. software, and digital technology that affect businesses.
Simply put, Simply put,
When people have money, businesses usually earn more. Technology helps businesses work faster, easier, and
When money is limited, businesses often earn less. better.
It includes: It includes:
 Inflation  Internet
 Interest rates  Online shopping
 Exchange rates  Mobile banking
 Employment  Artificial Intelligence (AI)
 Automation  Does weather affect the business?
 Social media  Is the business environmentally friendly?
Guide Questions  Can floods or typhoons interrupt operations?
 Is there new technology? Localized Example
 Can technology improve the business? Example 1: Fishermen in Misamis Occidental
 Do customers prefer online shopping? During bad weather,
Localized Example Fishermen cannot go fishing.
Example 1: Online Selling Result:
A clothing store in Oroquieta City began selling products  Fish supply decreases.
through:  Fish prices increase.
 Facebook Marketplace  Restaurants selling seafood are affected.
 TikTok Shop
 Shopee Example 2: Flooding
Sales increased because more customers could buy online. A heavy typhoon causes flooding in Lopez Jaena.
As a result:
Example 2: QR Payments  Stores temporarily close.
A local café accepts:  Roads become impassable.
 GCash  Delivery trucks cannot transport products.
 Maya Businesses lose income during this period.
 QR Ph Activity: Identify the PESTLE Factor
Customers no longer need cash, making payment easier and Directions: Read each scenario carefully. Identify which
faster. PESTLE factor (Political, Economic, Social, Technological,
Legal, or Environmental) is being described. Write only the
L – LEGAL FACTORS
Simple Meaning correct factor.
Legal factors refer to the laws and regulations that Scenario 1
businesses must follow. The Philippine government approved a law increasing the
Simply put, excise tax on cigarettes and alcoholic beverages. Prices
Businesses must obey the law to avoid penalties or
became higher, causing some stores to experience lower
closure.
It includes: sales.
 Consumer protection laws Scenario 2
 Labor laws Because of the continuous increase in fuel prices,
 Copyright laws transportation costs also increased. Many grocery stores
 Business permits
raised the prices of their products.
 Health regulations
 Environmental laws Scenario 3
Guide Questions Many students in Lopez Jaena now prefer buying school
 What laws apply to the business? supplies online instead of visiting local stores.
 Does the business have permits? Scenario 4
 Are workers treated fairly?
A small bakery started accepting GCash, Maya, and QR Ph
 Is the business following safety rules?
Localized Example payments, resulting in increased sales.
Example 1: Food Business Scenario 5
A small eatery must secure: Before opening a new milk tea shop, the owner secured a
 Barangay Clearance Barangay Clearance, Mayor's Permit, Business Permit, and
 Mayor's Permit
 Sanitary Permit Sanitary Permit.
Without these permits, Scenario 6
the business may be fined or closed. A strong typhoon hit Misamis Occidental, causing floods
that damaged farms and delayed deliveries.
Example 2: Employee Rights Scenario 7
A restaurant owner must pay employees at least the legal
Many people in the community have become more health-
minimum wage and provide benefits required by law.
conscious and now prefer fresh fruit juices over soft drinks.
E – ENVIRONMENTAL FACTORS Scenario 8
Simple Meaning The Bangko Sentral ng Pilipinas increased interest rates,
Environmental factors refer to natural conditions and making business loans more expensive.
environmental issues that affect businesses.
Scenario 9
Simply put,
Nature and climate can either help or harm businesses. The Department of Labor and Employment announced an
It includes: increase in the daily minimum wage.
 Weather Scenario 10
 Climate change A local clothing store created a Facebook Page and TikTok
 Natural disasters
Shop, increasing online orders.
 Pollution
 Waste management
 Environmental protection
Guide Questions