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How to do Pestle Analysis – A Killer Guide

Pestle analysis

As a pestle analysis help provider, we understand the problems you face in doing the task. Thus, through this guide, we will give you an in-depth idea of how to do a pestle analysis of any company.

What is a pestle or pest analysis?

A pestel analysis is helpful in identifying the factors that may cause changes in your business market. You can also use this tool to analyze the market. It will help you make marketing plans accordingly. A company considers six factors while doing a Pestle analysis:

  • P – Political
  • E – Economical
  • S – Sociological
  • T – Technological
  • L – Legal
  • E – Environmental

These six factors give you an idea of whether your current or desired market is suitable for business. You can make a decision about expanding or limiting your market reach after considering all these elements.

So, now you have the idea of the what is a pestle analysis. Next, let’s get an in-depth view of these six factors to gain better understanding.

Pestle Analysis

Political

Having a fair idea of the political factors of a country is important in operating smoothly. It helps in identifying how a government’s actions and rules may influence an economy. Will the government rules and policies affect the business in any way? These are the points you can consider in political factor.

Politics may affect the operations as well. The personal interest of the employees may also influence the functioning of an organization. Hence, you must give a thought to all of it while writing the P of the Pest analysis.

Economic

Next, comes E, it stands for economics. Here, you have to take the same approach of analyzing the internal and external economic environments. You have to analyze a company’s project viability while assessing the internal factors. It can also give you an idea of the internal soundness of the project. You can use financial models and accounting techniques for the same purpose.

You focus on interstate taxes, embargoes, and interest rates while considering the external events. Look at the economic growth, inflation, minimum wage, working hours and financing availability, etc. Covering all these aspects make your economic element of pestle analysis complete.

Sociological Factor

This aspect of pestle analysis identifies the events that affect a market and community. You have to assess types of products that are in demand in the area you operate. Also consider the advantages and issues people face in the area of your operations.

For that, you need to analyze the cultural expectations, norms, and the population dynamics of the area. Furthermore, you need to know the health consciousness, career attitudes and preferences.

Technological Factor

Technology is another factor that you have to consider while doing a pestle analysis. Technology gets outdated in a short span of time. Doing this analysis helps you in using the right technology as per the market demands. You may make financial decision on the use of technology easily after giving a thought to it.

Legal

Next, comes L in the Pestel analysis. It stands for legal factors. You should analyze legal factors keeping both internal and external matters of a company in mind. Some laws may affect your business in the country of your operation. You should also maintain policies for your organization.

A legal analysis helps you in giving a thought to both these angles. As a result, you can come up with the legal strategies to address both these legal aspects. The main legal aspects you look in this analysis are the employment, taxation, imports, and export.

Environment

You must have awareness of the environment where your business operates. This E of the pestle analysis helps you to know the environmental aspects that may affect your business. These aspects can be natural, social and economic in nature.

Area temperature, monsoons, natural calamities come into the natural category. Travel access and ground conditions fall into the socio-economic factors category. Near water source and ground continuation are also the parts of it.

The advantages and disadvantages of Pestle analysis

Now you are familiar with what is a pestle analysis. You also must have gained a fair idea of the six factors of a business analysis. You can get a better understanding of it if you are aware if its advantages and limitations. So, let’s learn the same in this section.

Pestle Analysis

Advantages of a pestle analysis

It is cost effective

You can understand that you don’t need to do any expenses to conduct a pestle analysis. Gain the information about various factors you have to do research. It may do lots of good for your business in a short span of time.

It gives you deep understanding

You can’t deny that some factors may go unnoticed in your business meetings. It may affect your firm directly or indirectly. A pestle analysis helps you in considering different factors that may affect your business. It promotes strategic thinking for a better understanding of the strategic planning.

It makes you more alert

Business analysis is helpful in analyzing different organizations broadly. You can use it to analyze some of your products or marketing plans. You can make plans about improving bond with the customers through a pestel analysis. This way you become more proactive about your business.

It helps you in identifying the opportunities

Identifying the opportunities and taking the steps according to it helps your business. Opportunities may be external often. Hence, it is a must for you to do the pestle analysis of the external environments. It will help you in recognizing the market trends. You will also learn what your competitors do to survive.

Limitations of a pestle analysis

You can’t be sure of the external factors

A pest analysis can’t assure you of the consistency in the external matters. In a pestel analysis, you consider all the factors extensively. You conduct an analysis to cut down the uncertainty about the external and internal factors. At best, you may have assurity of the internal operations of your company running as per the plan. However, things can change rapidly in the external environment and you may not have plans for that.

A pestel analysis seems like a simple presentation

A pestle analysis looks simple whether you do it for your college or a firm. It is due to its simple format. You have to describe the six factors of pestle in your analysis simply. It may not have a good impact on your team members due to lack of creative elements in it. However, a more critically done analysis may grab peoples’ attention.

Gathering information is not easy

Business analysis is the tool that requires you to gather broad information. Without the relevant and vast information, your pestel analysis would be a waste. But, gathering the information is not the easiest task. It is possible that you may not find the updated data for your analysis all the time. It may lead to you feeding the assumptions in it, instead of facts. This way it will hurt your business.

How to do a pestle analysis of a company

In the above sections, we discussed advantages and limitations of pestle analysis. We understand your ultimate objective is to learn how to do a pestel analysis of a company. You may have to do a pestle analysis of Coca Cola or some other company during the academics. Hence, in this section, we will focus on giving you an idea of the same.

Pestle Analysis

Understand the Pestel Factors

To make impeccable strategies, you need to ensure that your pest analysis is well-researched. For that, it is a must for you to understand the six pestle factors thoroughly. So, let’s find out the points you should check for while considering the six pestle factors.

Political factors

  1. Government policies
  2. Government term and change
  3. Trending policies
  4. War, terrorism and conflicts
  5. Elections and political trends
  6. Internal political issues
  7. Inter-country relationships
  8. Initiatives and funding grants
  9. Corruption
  10. Lobbying and pressure groups

Economical factors

  1. 1. Local economy
  2. Economy trends
  3. Inflation
  4. Taxation
  5. Interest
  6. Industry growth
  7. Import and export ratios
  8. International trade
  9. Seasonality growth
  10. International exchange rates

Sociological factors

  1. Demographics
  2. Work ethic
  3. Brand, company, technology image
  4. Lifestyle trends
  5. Cultural Taboos
  6. Media views in the industry
  7. Consumer purchasing patterns
  8. Advertising and publicity
  9. Purchasing access and trends
  10. Major events and influences

Technological factors

  1. Emerging technologies
  2. Technology legislation
  3. Research and innovation
  4. Maturity of technology
  5. Intellectual property issues
  6. Information and communications
  7. Competitor technology development

Legal factors

  1. Current legislation
  2. Proposed legislation
  3. International legislation
  4. Employment law
  5. Health and safety regulations
  6. Regulatory bodies and processes
  7. Industry-specific regulations
  8. Tax regulations
  9. Consumer protection
  10. Competitive regulations

Environmental factors

  1. Environmental regulations
  2. Reduction of carbon footprint
  3. Sustainability
  4. Ecological regulations
  5. Impact of adverse weather

Collect relevant data

Research is the key to successful pestle analysis. It gives you a fine idea of what may work for your business and the things you need to be aware of. Hence, the next step you should take while doing a pest analysis is to gather relevant information. You must focus on finding the information that can give you the idea of the external environment. Internet is the source you can use for the same purpose. You also have the option of carrying out your own research. However, it may cost you some money.

Give a thought to the opportunities

It is evident that you gain a fair idea of your market through research. Also, your objective stays to take your business to a new level by offering the market what it wants. So, next step you need to take in the pestle analysis is to identify the opportunities. You must find out how you can make your goods and services efficient for the consumers. Find out what new products you can develop. And try to identify the areas where you can sell your products.

Considered threats as well

Along with the opportunities, there are always some threats that may undermine your business. That makes it a must for you to give a thought to the threats your business may face. It will allow you to make strategies to prevent and counter those threats. Or at least, you will be able to reduce the influence of it.

Take action accordingly

These pestel analysis steps help you in identifying the opportunities and threats for your business. So, you must use your knowledge wisely and make the strategies that help your business.

If you find it tough to do a pestle analysis for your assignment, you can take assistance from our experts.

Also, we have five examples of Pestle Analysis for you. Click here to read!