What is a PESTLE Analysis and why do I need it?

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There are specific questions that you should consider when starting a business. 

How could the country’s political situation affect my business? What are the big economic factors in the world today?  How much do fashion, culture or public opinion affect the market I am entering?  

What new tech is on the horizon that could disrupt how a business does things? Could there be changes in industry regulation? How do the weather and seasons affect your business? 

These questions come together in a PESTLE analysis 

  • P – Political
  • E – Economic 
  • S – Social 
  • T – Technology 
  • L – Legal 
  • E – Environmental 

P – Political 

Could a change in government affect my business for better or worse? Does the political party in power focus on the public or private sector? What larger political debates are there that could impact on my business? 

E – Economic 

What is the current state of the global economy? Is there a recession or are we reliving the roaring twenties? How much do things cost in general? Are petrol prices high or low?  

S – Social 

Is my business too dependent on a passing trend? Am I creating something that is time-tested and true? What opinions does society have about my industry? How could attitudes and fashions change and how could this impact my business. 

T – Technology 

What technology is your business dependant on? Could your work be taken away by a robot, artificial intelligence or 3D printing? Could you use technology to make your business better, stronger, faster? Think about how drastically smartphones have changed how we do things? Does a more tech-savvy public pose a threat or offer an advantage to your business.  

L – Legal 

What laws must your business follow, and how could they change? 

Are there any proposed laws coming through government that could affect your businesses? 

E – Environmental 

How could my business be affected by its location, weather and the global environment?  

A PESTLE analysis is useful no matter the industry a business might be in. This type of analysis will not only help you understand the larger market, but this analysis can also help you define what your company should do, how you should do it and help you set your organisation’s overall goals and strategies. 

Each factor of a PESTLE analysis will differ for different industries, but it is vital for a start-up company and SMEs who want to develop and grow that they conduct a PESTLE analysis during their business planning. 

While a  SWOT analysis looks at the internal factors you can control in your company, a PESTLE analysis gives you a more global view of the external factors that can affect your business. If you do not know what a SWOT analysis is, you will find the answer here.