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PESTLE Analysis

PESTLE Analysis

What is PESTLE Analysis?

A PESTLE analysis is a method for analyzing the main factors affecting an organization from the outside. They are the acronyms of Political, Economic, Social, Technological, Legal, and Environmental factors. It provides people managers with information about the external factors that affect their business and classify the business’s external powers.

PESTLE Factors Explanation

P- Political Factors

The political factors assess the effect of government and government policy on an organization or a particular industry. This will include trade, monetary, and taxation policies, as well as political policy and stability.

E- Economic Factors

The economic factors affect the economy and its efficiency, which has a direct impact on the business’s financial performance. Interest rates, jobs or unemployment rates, raw material prices, taxes, inflation, and foreign exchange rates are all factors to consider.

S- Social Factors

The social factors are concerned with the social climate and the detection of new patterns in society. This enables a marketer to have a better understanding of their customers’ needs and desires. Religion & belief, demographics, educational levels, cultural patterns, attitude shifts, and lifestyle changes are all factors to look at.

T- Technological Factors

The technological factors take into account the pace of technological advancement and growth that could affect an industry or market. Changes in internet and cellular technologies, automation, and research & innovation may all be factors. There is an inclination to concentrate solely on emerging technology advances, but modern distribution, manufacturing, and logistics approaches must also be considered.

L- Legal Factors

As for the legal factors, a business must be aware of what is lawful and permissible in the jurisdictions in which it operates. It must also be mindful of any legislative changes and the implications for operating the business. Employment law, consumer law, health & safety law, domestic as well as trade policy and restrictions are all factors to consider.

Note: Political and legal factors overlap, but the main distinction is that political factors are regulated by government policy, while legal factors must be followed.

E- Environmental Factors

The environmental factors have to do with the effects of the surrounding climate and ecological parts.   Environment, recycling practices, carbon footprint, waste management, and sustainability are all factors to consider.

A PESTEL analysis aids an organization in identifying external factors that may affect their market and determining how they may affect their company directly. When doing such a study, it’s critical to not only identify but also evaluate the factors that influence the organization.

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