What is a PESTLE analysis?

A PESTLE analysis is a framework that can be used to analyse the factors which influence an organisation from the outside. It is often used by senior managers to help understand the ‘big picture’ but it is a useful tool for all people managers.

Businesses may use a PESTLE analysis on a regular basis to help make strategic decisions. However, it can also be used as a planning tool in many other situations including product development, marketing, workforce planning and recruitment.

As well as helping managers to understand the labour market conditions, a PESTLE analysis can also help to identify future challenges. It can help to ensure that managers, their teams and their organisations are ready for change.

What are the six factors? The six PESTLE factors describe the external forces which influence an organisation. PESTLE stands for:

Political
The political factors can include tax policy, environmental regulations, trade restrictions and reform, tariffs and political stability.

Economic
The economic factors could be economic growth/decline, interest, exchange, inflation and wage rates, minimum wage, working hours, unemployment (local and national), credit availability and the cost of living.

Social
The social factors include cultural norms and expectations, health consciousness, population growth rates, age distribution, career attitudes and health and safety.

Technological
New technologies are continually emerging (for example, in the fields of robotics and artificial intelligence), and the rate of change itself is increasing. How will this affect the organisation’s products or services?

Legal
Legal factors may be changes to legislation impacting employment, access to materials, quotas, resources, imports/exports, and taxation.

Environmental
The environmental factors cover areas such as global warming and the increased need to switch to sustainable resources; ethical sourcing (both locally and nationally).

Article copied from Futurelearn mooc: People Managing Skills