What is PESTLE Analysis? All you need to know

While working in the market, every businessman needs to set some strategies for a successful career. We have many live examples of successful businesses around us, and they all have some success story behind them. PESTLE Analysis is a great tool to identify the factors are affecting the business.

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A new and small business needs to develop some plans to practice and compete in the business market globally. Many factors are affecting the business, whether they are the company's internal or external factors. To compete and stand firm against all factors, you need to map the PESTLE analysis and how to use it in your company's favor.

What is PESTLE analysis?

Usually, we are well aware of the internal challenges and their impacts on our companies, but we neglect the external forces or factors having great impacts on our business. As a new business rival, it is hard to identify the external factors and how they can affect your company.

So, the answer to PESTLE analysis is PEST analysis means identifying the external attackers and making strategies accordingly. The external factors may be national or global. Let's open the summation of the word PESTLE. We find that P stands for political, E for economics, S for social, T for technological, Le for legal, and E for environmental.

These factors are not under our control and show fluctuations that can be positive or negative for our business. What can we do in this regard? We can identify the factors' intensity and nature and develop effective strategies to bridge the gaps.

 This analysis helps you to identify the internal strength and weaknesses of the company by comparing the impact of external and internal factors. What do you need to do? When you know what is PESTLE analysis, you have an idea about its importance for your company.

You should conduct a PESTLE analysis for your company every six months to know about the macro-environment. When you know about the macro-environment, you know well how to survive in competitors' markets.

What factors are involved in PESTLE analysis?

As we have discussed earlier in this article, what is PESTLE analysis, and what factors does it include. We know the external factors of the macro-environment, but we do not know how they affect small or large businesses. Knowing each factor will help you understand, analyze and develop strategies. So, the following detail will make you clear at every point.

·  Political factors

Political factors for a company may change at any time, and they are at the national level. The extent of changes in these factors may vary per the government type and its policies. If a government changes the tax on business, tariffs, Environmental regulations, trading rules and restrictions, reforms, and many other things, it will directly influence your company.

You also need to change your policy after observing the changes in tax policy and trading principles. Suppose your company is getting a heavy profit by exporting its products and the government has put some trade restrictions. What will you do? You will make your strategies to beat these hindrances and continue your business journey.

·  Economic factors

Economic factors also have great effects on business growth. When learning about what is PESTLE analysis, you will observe the economic factors as well. What economic factors include? They include working hours, wedges, employment, unemployment rate, economic growth, credit availability, interest, inflation, etc.

You need to cope with all the disasters you may face while observing any fluctuation in the economic factors. Any change in any economic factor directly affects the company's policy. If the interest rate increases, it will surely impact the product rate and the wedges rate as well.

·  Social factors

Social factors also have a great influence on the success of a company. Social factors may include the growth rate, age group, morals and ethics, norms of society, health consciousness, population, career attitude, and safety. These all factors belong to society and affect your company positively or negatively. Suppose you are selling a product for kids. There must be a season for newborn babies and kids as there is a wedding season. You need to identify those seasons and improve your product development on this occasion.

·  Technological factors

Technology has been doing a great job in every field. You must also understand this fact and look for innovative ideas to cope with gaps. Technology factors include welcoming the innovations, introducing the technology in your projects, and accepting them for the development of your company.

For example, we can observe robotic agriculture, artificial intelligence, and machine learning. If we add some technological factors that other companies are using, like the world's best car company Toyota is using technology for car manufacturing in the smartest way.

·  Legal factors

Legal factors are also part of PESTLE analysis and have equal impacts on the business as the other factors have. Legal factors include legislation, quotas, taxation, resources, and some rules and regulations of a state. These factors also affect the company's rules and regulations regarding how much time workers will work and how they will get their salaries.

·  Environmental factors

Environmental factors are of great importance as well. They include energy consumption, hazardous environmental evaluation, disposal law, environmental protection law, and some other national laws of a country to protect the environment.

You should be well aware of the environmental laws and should look for the steps to hold on to the laws. It will enhance your company's reputation and let you decide on what you need to bridge the gaps between the company's needs and environmental protection.

What are the uses of PESTLE analysis?

PESTLE analysis is a useful tool for businessmen as it keeps them alert about future threats and also lets them know about new and beneficial opportunities. We use PESTLE analysis for:

Business planning

PESTLE analysis is used for business planning after analyzing the business's internal environment and the impact of external factors.

Tasks and people planning and management

By knowing the time's norms, legal, and economic factors, you can better divide the tasks and assign them to the relevant person. You can create a competitive environment by getting a grip over the situation.

Planning marketing strategies

As the external environment decides the destination of your company so, it enables you to plan effective market strategies.

Strategy development for products

When you know the demand of the market, you can better work for the product development.

Change at the organization level.

PESTLE analysis is used for bringing change at the organizational level after observing changes in tax, norms of society, and some legal interpretations.

How to develop or execute the PESTLE analysis process?

What is PESTLE analysis? You have done with it and know what it includes and how different external factors affect your business. You should also work on it properly so that you can get fruitful results after investing your time in this analysis. Following are steps you need to follow if you are looking for PESTLE analysis.

Brainstorming of factors involved in PESTLE analysis

Before you start working on strategy development, you should go for brainstorm external factors that can affect your business. So, sit with your team or groups and revise the external factors that are involved in the PESTLE analysis.

·   Political

·   Economic

·   Social

·   Technological

·   Legal

·   Environmental

Do discuss these factors in depth and analyze their level or extent of impacting the business. Doing so can better understand the need for time and develop suitable strategies.

Idealize the opportunities you can have

When you have gone through what is PESTLE analysis, you know where your company is standing and what opportunities you may have in the future to improve it. Look for the feasible factor situations and use them in your favor. For example, if you notice trends of products in a specific age group, you can take advantage of it and manufacture the products according to their choice and needs.

Also, look for the threats you may face

Not only should you look for the opportunities, but you should also keep looking for the risks or threats that can be a hindrance to your success roadmap. When you identify and enlist the future threats, you can look for the best ways to deal with them proactively and make your way smooth to success.

It's time to act

In the end, when you know what factors are affecting to what extent, how you cause them to get maximum opportunities, and which threats you can face in the future, you can design the strategies. After designing the strategies to make your future bright in the business market, you can take action to remove the hurdles and look forward to the best opportunities to enhance your productivity.

Main advantages of PESTLE analysis

Some advantages of PESTLE analysis are:

·   Simplicity

·   Broader understanding

·   Strategic thinking

·   Anticipation of future threats

·   Visualization of opportunities

Some disadvantages of PESTLE analysis

PESTLE analysis also observes some disadvantages, which are:

·   Insufficient data

·   Inappropriate data handling

·   Wrong assumptions

·   Never quitting on practice

·   Difficulties due to changes in any step


For the best working of a new company to compete with other good and senior companies, it is necessary to know what is PESTLE analysis and how to use it. It will help you to develop business strategies and make your company stand among the best competent companies.

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