• Category
  • >Business Analytics

What is PESTLE Analysis? Everything you need to know about it

  • Ritesh Pathak
  • Dec 06, 2020
  • Updated on: Nov 21, 2023
What is PESTLE Analysis? Everything you need to know about it title banner

In today’s world, we have so many examples of successful organizations before us. From small startups to bigger firms, every organization is focused on improving and heading ahead. Different tools are leveraged by them for this purpose. The competition has become so fierce in the market that every single decision can change the whole dynamics- either negatively or positively.

 

It becomes necessary for organizations to keep a check on each decision making which in turn aids them in sustaining through the blows of market fluctuations. 

 

Since we are living in a ‘global village’, everything happening around us leaves an impact on us. The same goes for an organization. Generally, in marketing theory, we separate a micro and macroeconomic business environment, with the micro environment primarily being the internal factors affecting a specific industry, that includes the stakeholders and competitors of a particular firm and the macro environment being the external factors influencing a firm, factors which it cannot control. 
 

 

It is not only internal matters that decide a company’s fate, but many external factors also make an equal impact. The political situation in a country, technological developments, environmental factors, the legality of actions, economics, social factors, all play an important role. Organizations are well-aware of this fact, so they leverage an economic tool- PESTLE analysis. 

 

 

In this blog, we will discuss this same tool. We will discuss everything about PESTLE analysis. What does it mean? What are those different factors? How to do a PESTLE analysis? What are its advantages and disadvantages? What is it used for? 

 

 

Read our blog 8 Most Popular Business Analysis Techniques used by Business Analyst

 

 

What is PESTLE Analysis?

 

PESTLE analysis sometimes referred to as PEST analysis, is a concept in marketing principles. This concept is used as a tool by organizations to keep a track of the external factors impacting the organization. PESTLE is a mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal, and E for Environmental. On the basis of the organization, it can be reduced to PEST or additional areas can be added (such as Ethical).

 

PESTLE analysis forms a much more comprehensive version of the SWOT analysis. This form of analysis is then compared with the company’s internal strengths and weaknesses via a SWOT analysis. This aids in determining the future scope of action and in developing measures for strategic management.

 

 

Why is PESTLE analysis used? 

 

Businessmen and entrepreneurs often turn towards business analysis tools for aiding them in making suitable decisions for their firm. Before any business venture, the business owners often remain doubtful regarding its outcome and how it would be received.  Pestle analysis is adopted for determining an answer to these questions.  This analysis involves asking questions that give the analyst an idea about the things to keep in mind. These questions are: 

 

  • What is the political situation of a country and what is its effect on the markets?

  • What are the prevalent economic factors? 

  • How is culture affecting the markets and what are its determinants?

  • What are the technological inventions that are trending and what are other future possibilities in this field?

  • What are the current legislations that regulate the industry and if they need to be changed?

  • What are the environmental concerns for the industry? 

 

Analysts find answers to these questions and try to cover all the aspects through this analysis. The PESTLE analysis is more than just understanding the market. This framework represents one of the backbones of strategic management by not only defining what a company should do but also accounting for an organization’s goals and the strategies strung to them.

 

 

Factors of PESTLE Analysis

 

Each of the factors mentioned above, from Political, Economic, Social, Technological, Legal to Environmental, have an impact on an organization. Yet the significance of each of these factors may differ based on the different kinds of industries.

 

 

1. Political factors in PESTLE Analysis

 

Political factors include tax policy, environmental regulations, trade restrictions and reform, tariffs, and also political stability. These factors determine the extent to which a government may influence an industry or a company. For example, the government may bring new tax reforms that might change the whole revenue-generating system of a company.

 

Some tariff trade barriers that can prove to be a hindrance in the way we run our business operations include customs policy and export subsidies. Non-tariff trade barriers meanwhile include determining minimum import prices as well as bans and restrictions on exports.

 

 

2. Economic factors in PESTLE Analysis 

 

Economic factors include economic growth/decline, interest, exchange, inflation and wage rates, minimum wage, working hours, unemployment (local and national), credit availability, and cost of living. These factors are determinants to an economy’s performance that directly impacts a company and also have resonating long term effects.

 

For example, a rise in the inflation rate of any economy would affect the way companies price their products and services. Besides, it would also affect the purchasing power of a consumer and may result in a change in demand/supply models for that economy.

 

You can also take a look at our blog on 4 Ps of Marketing.

 

 

3. Social factors in PESTLE Analysis

 

Social factors include cultural norms and expectations, health consciousness, population growth rates, age distribution, career attitudes, health, and safety. These factors are helpful for companies to better plan their marketing analytics and strategy. For example, the Indian market generally witnesses a surge in demands for vehicles during the last months of the year, due to marriage and the festive season. 

 

These factors are particularly significant for marketers as they target certain customers. Additionally, they also highlight the local workforce and its zeal to operate under certain circumstances.

From Political factors, economic factors, social factors, technological factors, legal factors to environmental factors, the PESTLE analysis comprises each of these factors.

The factors of PESTLE Analysis

4. Technological factors in PESTLE Analysis

 

Technological factors mean the innovations and developments in technologies. These factors impact an organization’s operations. Several new developments like Artificial Intelligence, IoT, Machine Learning, Deep Learning, are being made in the technology field and if a company fails to match up the trend it may lose its position in the market.  

 

A few of the technological factors which are included in the PESTLE analysis include the rate of technological change, the evolution of infrastructure, and any government or institutional research. 

 

 

5. Legal factors in PESTLE Analysis

 

Legal factors include changes to legislation impacting employment, access to materials, quotas, resources, imports/exports, and taxation. These factors have both external and internal sides. Certain laws have an impact on the business environment in a country.

 

Apart from these laws/rules, companies maintain their own set of rules and regulations by which an employee is expected to abide by. So, the legal analysis takes accounts of both these angles and forms strategies keeping them in mind.

 

Recommended blog - AI in the law industry.

 

6. Environmental factors in PESTLE Analysis

 

These factors are mainly concerned with the effect of the surrounding environment and the influence of ecological aspects. These include waste disposal laws, environmental protection laws, energy consumption regulation.

 

This aspect of the PESTLE is crucial for certain industries particularly example tourism, farming, agriculture, etc. However, Global warming and the increased need to switch to sustainable resources; ethical sourcing (both locally and nationally, including supply chain intelligence) have compelled every organization to consider the environmental factors. Corporate Social Responsibility (CSR) has been made compulsory for organizations. 

 

Also Read: Dark side of Information Technology (IT) industry

 

How to do a PESTLE Analysis? 

 

Conducting a PESTLE Analysis involves some steps which we have mentioned below:

 

  • Identify the scope of the research. It should cover the present and the future scenarios. It should apply to the areas of the business world where the particular organization operates. 

  • Form a good team and assign responsibilities accordingly. Involving diverse people helps in collecting content-rich data. 

  • Identify appropriate sources of information. These may include people seeking professional help regarding an issue or a change/update in current policy. 

  • Gather and assemble the information. Better create a template as the basis for recording the information. 

  • Analyzing the collected information is a significant step. 

  • Create an order of the issues to be addressed. Try to resolve the issue, that can create a big impact, at the earliest.

  • Identify the business-specific options to address the issues.

  • Create a well-informing document for all the stakeholders

  • Disseminate and discuss the findings with stakeholders and decision-makers

  • Decide on the actions to be taken and trends that need to be monitored on an ongoing basis

 

To be effective, organizations must perform PESTLE analysis on an ongoing or regular basis. Organizations that do so enjoy a competitive advantage as they spot trends before others. 
 

What is a PESTLE Analysis used for?

 

A PESTLE analysis is often used as a broad fact-finding activity. It helps an organization establish the external factors that could impact decisions made inside the organization. By understanding the impact these external factors can have on an organization, it becomes handy for organizations to plan better. They can form strategies to minimize the threats and maximize opportunities for themselves. 

 

This image shows the uses of PESTLE Analysis.

Uses of PESTLE Analysis

 

A PESTLE analysis is an appropriate framework that fulfills these purposes. Apart from that, it also helps organizations in a range of business planning situations. These include:

 

1. Strategic business planning

 

A PESTLE analysis report is a useful document to have by your side when starting a business planning process. It provides the senior management team with loads of contextual information about the company like the direction in which the business is heading, brand positioning, growth targets, and the areas of concern that may lead to a decline in growth and productivity.

 

 

2. Workforce Planning

 

Workforce planning is a business process that aligns business and people strategies. A PESTLE analysis helps businesses to identify disruptive changes to business models that may have a profound impact on the future employment landscape. Organizations are facing huge changes in their workforce from increased skills gaps, the creation of job roles that did not exist 10 years ago like the IT department, and job reductions or displacement. 

 

 

3. Marketing Planning

 

As PESTLE analysis brings a lot of information on external factors, it also brings crucial market insights. So, it can help prioritize business activities to accomplish specific marketing objectives within a set timeframe. 

 

Also Read | Marketing Analytics tools. 

 

4. Product development

 

As mentioned above, a PESTLE analysis also has crucial market insights that tell about the response from customers about a product or service. This helps businesses to decide on whether to enter or leave a route, modify an existing product, and when and what to launch as a new product. 

 

 

5. Organizational Change

 

A PESTLE analysis is a powerful tool for understanding the context for change, and focusing on the areas to make that change successful. In this situation, PESTLE analysis works best with a SWOT analysis. This helps an organization to identify the potential opportunities and threats around labor changes, for example, skill shortage and workforce capabilities. 

 

 

Advantages and Disadvantages of a PESTLE Analysis

 

Everything has both aspects and so does a PESTLE Analysis. Let us look at the advantages as well as the disadvantages of it. 

 

Advantages

 

  • It is a simple framework- easy to understand and conduct

  • It facilitates a better and broader understanding of the business environment.

  • It encourages organizations to develop external and strategic thinking

  • The most talked advantage- it enables an organization to anticipate future business threats and allows it to minimize or nullify the impact

  • It also allows organizations to spot an opportunity and to capitalize on them

 

Disadvantages

 

  • Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s easy to use insufficient data.

  • It’s easy to get lost in the enormous amount of data. So, there always remains a risk of capturing too much data and undertaking too much data analytics that may lead to ‘paralysis by analysis’

  • As a PESTLE analysis works on assumptions, there remains a risk of being wrong

  • Once in a while an attitude doesn’t work with PESTLE analysis. So, it must be a regular practice.

  • The pace of change makes it difficult to anticipate the developments and this may affect the organization in future

 

 

Conclusion

 

It can be stated that PESTLE analysis is a great tool for businesses that can be leveraged for several purposes. It brings information about the possible impact of the six external factors on an organization. This makes it easier for organizations to prepare for any sort of problems caused by these PESTLE factors.

Trending blogs

  • 5 Factors Influencing Consumer Behavior

    READ MORE

  • Elasticity of Demand and its Types

    READ MORE

  • An Overview of Descriptive Analysis

    READ MORE

  • What is PESTLE Analysis? Everything you need to know about it

    READ MORE

  • What is Managerial Economics? Definition, Types, Nature, Principles, and Scope

    READ MORE

  • 5 Factors Affecting the Price Elasticity of Demand (PED)

    READ MORE

  • 6 Major Branches of Artificial Intelligence (AI)

    READ MORE

  • Scope of Managerial Economics

    READ MORE

  • Different Types of Research Methods

    READ MORE

  • Dijkstra’s Algorithm: The Shortest Path Algorithm

    READ MORE

Latest Comments

  • michellefreed209a0258a69b024d2d

    Jun 14, 2025

    I needed help I was involved in an accident on December 1st and I had to pay the medical bill by Jan 1st and my lawyer was handling all of the process and my medical bills and all that, my lawyer ensured that she will file the medical bills form by herself, and now when I check my credit score I have a collection on it for that hospital bill and it has dropped my scores to 569. I was so fucking pissed out, that motherfucking bill fucked me over. I read about PINNACLE CREDIT SPECIALIST on this platform, and I took the risk because I was scared of trusting a huge amount of money and my personal information to a total stranger, but I decided to give him a try. I’m marveled by the results I got afterwards. They deleted the medical bills from my report including other negative items and late payments. I now have an excellent score of EQ 801, EX 809 and TU 811. All this happened within 6 days. Contact: PINNACLECREDITSPECIALIST@GMAIL.COM or call +1 (409) 331-2269.

    Like Reply

  • Gillian Bayford

    Jun 16, 2025

    I want to use this medium to share my incredible manifesting with Dr. Kachi, who truly changed my life. For a long time, I struggled with homelessness after losing my job as a nurse. Life felt like an endless battle, and I spent many years trying to win the lottery, hoping for a better future. But despite my efforts, I had no success and was growing increasingly frustrated. That was until I came across an amazing testimony from a woman named Natasha, who shared how Dr. Kachi helped her win the National EuroMillions jackpot. I had always loved playing EuroMillions, but winning seemed impossible for me. However, after seeing Natasha's story, I decided to reach out to Dr. Kachi prepared a special spell to help me with guaranteed lucky numbers. Within 24 hours, he provided me with the winning numbers and instructed me to play. To my amazement, I won £184.656 million in the EuroMillions! Thanks to Dr. Kachi, my life has been transformed, and my financial situation has changed for the better. I will never forget this joyful moment, as it has been the best thing to ever happen to me. If you’re struggling and seeking a way out, never give up. Dr. Kachi can help you, just as he helped me. Keep your faith and take a chance – your life could change too! contact website https://drkachispellcaster.wixsite.com/my-site his email drkachispellcast@gmail.com or his phone text or call number: +1 (209) 893-8075

    Like Reply

  • briceladson19d3d1e959b51a4f50

    Jun 18, 2025

    Wonderful Information, I had credit scores of 491 (TransUnion) 519 (Equifax) and 528 (Experian) in March. I applied for a mortgage loan in April and was not approved because of my low FICO scores. I asked a few questions on Reddit about how I get my credit fixed. I got some many recommendations about PINNACLE CREDIT SPECIALIST. So, I contacted him to which he responded swiftly. I explained everything about my credit to him, but I was skeptical about releasing my funds to him which he said he can fix my credit when the job is done, I pay for their services, and I agreed to that. After three days I got a notification from Experian saying Congrats, your FICO Score went up. I quickly logged in to check. This dude raised my scores to 801 (TransUnion), 809 (Equifax) and 811 (Experian). All negative items on my credit report have been removed. No inquiries, no collections. I’m very grateful. I just got higher credit card offers. Pinnacle Credit Specialist is the greatest. Hit him up by email: PINNACLECREDITSPECIALIST@GMAIL.COM or call +1 (409) 331-2269. Don’t forget to mention I Brice referred you to him.

    Like Reply

  • Robert Alfred

    Jun 19, 2025

    CRYPTO SCAM RECOVERY SUCCESSFUL – A TESTIMONIAL OF LOST PASSWORD TO YOUR DIGITAL WALLET BACK. My name is Robert Alfred, Am from Australia. I’m sharing my experience in the hope that it helps others who have been victims of crypto scams. A few months ago, I fell victim to a fraudulent crypto investment scheme linked to a broker company. I had invested heavily during a time when Bitcoin prices were rising, thinking it was a good opportunity. Unfortunately, I was scammed out of $120,000 AUD and the broker denied me access to my digital wallet and assets. It was a devastating experience that caused many sleepless nights. Crypto scams are increasingly common and often involve fake trading platforms, phishing attacks, and misleading investment opportunities. In my desperation, a friend from the crypto community recommended Capital Crypto Recovery Service, known for helping victims recover lost or stolen funds. After doing some research and reading multiple positive reviews, I reached out to Capital Crypto Recovery. I provided all the necessary information—wallet addresses, transaction history, and communication logs. Their expert team responded immediately and began investigating. Using advanced blockchain tracking techniques, they were able to trace the stolen Dogecoin, identify the scammer’s wallet, and coordinate with relevant authorities to freeze the funds before they could be moved. Incredibly, within 24 hours, Capital Crypto Recovery successfully recovered the majority of my stolen crypto assets. I was beyond relieved and truly grateful. Their professionalism, transparency, and constant communication throughout the process gave me hope during a very difficult time. If you’ve been a victim of a crypto scam, I highly recommend them with full confidence contacting: 📧 Email: Recovercapital@cyberservices.com 📱 Telegram: @Capitalcryptorecover 📞 Call/Text: +1 (336) 390-6684 🌐 Website: https://recovercapital.wixsite.com/capital-crypto-rec-1

    Like Reply

  • lisatancredi259cd36126829e42f7

    Jun 21, 2025

    PINNACLE CREDIT SPECIALIST is the best credit repair service I have used and actually my last. My first impression of their service is a recommendable experience; I wasn't charged an outrageous fee on getting my credit fixed, which is unlike other credit repair companies, a friend recommended this to me when she got her credit fixed within 6 days through them, and I embraced the idea of no outrageous fee. But I got it all thanks to Pinnacle Credit Specialist, before this I went to several credit repair companies but I wasn't able to get my credit fixed not until I found the right one, thanks for existing for people like me, I strongly recommend Pinnacle Credit Specialist. Kindly hit them up by email: pinnaclecreditspecialist@gmail.com or call his phone +1 (409) 331-2269.

    Like Reply

  • Michael Davenport

    Jun 23, 2025

    I was recently scammed out of $53,000 by a fraudulent Bitcoin investment scheme, which added significant stress to my already difficult health issues, as I was also facing cancer surgery expenses. Desperate to recover my funds, I spent hours researching and consulting other victims, which led me to discover the excellent reputation of Capital Crypto Recover, I came across a Google post It was only after spending many hours researching and asking other victims for advice that I discovered Capital Crypto Recovery’s stellar reputation. I decided to contact them because of their successful recovery record and encouraging client testimonials. I had no idea that this would be the pivotal moment in my fight against cryptocurrency theft. Thanks to their expert team, I was able to recover my lost cryptocurrency back. The process was intricate, but Capital Crypto Recovery's commitment to utilizing the latest technology ensured a successful outcome. I highly recommend their services to anyone who has fallen victim to cryptocurrency fraud. For assistance, contact Recovercapital@cyberservices.com Capital Crypto Recover on Telegram OR Call Number +1 (336)390-6684 via email: Capitalcryptorecover@zohomail.com you can visit his website: https://recovercapital.wixsite.com/capital-crypto-rec-1

    Like Reply

  • stuartcollis1145f5a7837f2f46d7

    Jul 04, 2025

    I had a 3 year old credit card from capital one it’s was the only card I had, the limit is $300 they never graduated me, I didn’t know how to use it I also didn’t know they were 2 different dates on the card so I would pay it all off by 20th of each month and then by 22nd I spent it all off not knowing there was a statement date which eventually I learnt on the 25th of each month. So, then I had 6 late payments, and I didn’t know what to do, I was trying to rebuild my credit but every card I applied for got denied. Someone told me to wipe the whole card and its history off my report and start fresh. Because they said no credit is better than bad credit, and I was looking to rent an apartment but because of my credit I got denied several times. I needed someone to help me fix my credit; I was on a credit forum last month when a lady wrote about PINNACLE CREDIT SPECIALIST how they cleared her debt and increased her credit scores. I never believed what she said, but I decided to give them a try. I contacted them for repair assistance and I got a response immediately. They cleared out all negative items on my report including credit card debts and increased my scores to 800+ across three credit bureaus and also added positive tradeline within 14 days. They made it work for me. I have a clean profile now. My heart is full of gratitude. You can reach them by email: PINNACLECREDITSPECIALIST@GMAIL.COM OR Call +1 (409) 331-2269.

    Like Reply

  • Robert Alfred

    Jul 05, 2025

    CRYPTO SCAM RECOVERY SUCCESSFUL – A TESTIMONIAL OF LOST PASSWORD TO YOUR DIGITAL WALLET BACK. My name is Robert Alfred, Am from Australia. I’m sharing my experience in the hope that it helps others who have been victims of crypto scams. A few months ago, I fell victim to a fraudulent crypto investment scheme linked to a broker company. I had invested heavily during a time when Bitcoin prices were rising, thinking it was a good opportunity. Unfortunately, I was scammed out of $120,000 AUD and the broker denied me access to my digital wallet and assets. It was a devastating experience that caused many sleepless nights. Crypto scams are increasingly common and often involve fake trading platforms, phishing attacks, and misleading investment opportunities. In my desperation, a friend from the crypto community recommended Capital Crypto Recovery Service, known for helping victims recover lost or stolen funds. After doing some research and reading multiple positive reviews, I reached out to Capital Crypto Recovery. I provided all the necessary information—wallet addresses, transaction history, and communication logs. Their expert team responded immediately and began investigating. Using advanced blockchain tracking techniques, they were able to trace the stolen Dogecoin, identify the scammer’s wallet, and coordinate with relevant authorities to freeze the funds before they could be moved. Incredibly, within 24 hours, Capital Crypto Recovery successfully recovered the majority of my stolen crypto assets. I was beyond relieved and truly grateful. Their professionalism, transparency, and constant communication throughout the process gave me hope during a very difficult time. If you’ve been a victim of a crypto scam, I highly recommend them with full confidence contacting: Email: Recovercapital@cyberservices.com Telegram: @Capitalcryptorecover Call/Text: +1 (336) 390-6684 Website: https://recovercapital.wixsite.com/capital-crypto-rec-1

    Like Reply

  • Robert Alfred

    Jul 05, 2025

    CRYPTO SCAM RECOVERY SUCCESSFUL – A TESTIMONIAL OF LOST PASSWORD TO YOUR DIGITAL WALLET BACK. My name is Robert Alfred, Am from Australia. I’m sharing my experience in the hope that it helps others who have been victims of crypto scams. A few months ago, I fell victim to a fraudulent crypto investment scheme linked to a broker company. I had invested heavily during a time when Bitcoin prices were rising, thinking it was a good opportunity. Unfortunately, I was scammed out of $120,000 AUD and the broker denied me access to my digital wallet and assets. It was a devastating experience that caused many sleepless nights. Crypto scams are increasingly common and often involve fake trading platforms, phishing attacks, and misleading investment opportunities. In my desperation, a friend from the crypto community recommended Capital Crypto Recovery Service, known for helping victims recover lost or stolen funds. After doing some research and reading multiple positive reviews, I reached out to Capital Crypto Recovery. I provided all the necessary information—wallet addresses, transaction history, and communication logs. Their expert team responded immediately and began investigating. Using advanced blockchain tracking techniques, they were able to trace the stolen Dogecoin, identify the scammer’s wallet, and coordinate with relevant authorities to freeze the funds before they could be moved. Incredibly, within 24 hours, Capital Crypto Recovery successfully recovered the majority of my stolen crypto assets. I was beyond relieved and truly grateful. Their professionalism, transparency, and constant communication throughout the process gave me hope during a very difficult time. If you’ve been a victim of a crypto scam, I highly recommend them with full confidence contacting: Email: Recovercapital@cyberservices.com Telegram: @Capitalcryptorecover Call/Text: +1 (336) 390-6684 Website: https://recovercapital.wixsite.com/capital-crypto-rec-1

    Like Reply

  • aaronclerk001d6d984c683ee4c38

    Jul 10, 2025

    Holy crap, I went to check my credit score today via Experian and myFICO, finally 811. My wife and I are impressed with the services of PINNACLE CREDIT SPECIALIST. Although I don’t expect this to last too long (I’m buying a house) it is something that I’m proud of. I don’t want this to come off as bragging, I only bring it up because if anyone has any questions about how I build my credit or the different aspects of my score I’m more than willing to help others. You can hit them up by email: PINNACLECREDITSPECIALIST@GMAIL.COM or call +1 (409) 331 2269. Don’t fail to let him know Aaron referred you to him.

    Like Reply
    •