How To Do A Pestle Analysis
Updated by Xtensio
PESTLE Analysis is a strategic framework to identify, analyze, organize, and monitor key external factors that may impact an organization now and in the future. The goal of this exercise is to uncover the Political, Economic, Social, Technological, Legal, and Environmental forces surrounding your organization. So that you can keep an internal true north with your next big idea while these external factors come to play.
Click and start editing the template. Follow along this step-by-step guide to complete your PESTLE Analysis.
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With Xtensio, you can easily generate a PESTLE analysis tailored to fit your specific requirements. Click and fill info to brainstorm your PESTLE factors. The framework is most useful when you get input from participants with a range of different perspectives. Collaborate with your stakeholders, this is a live document. Then reference your findings to create a SWOT analysis. And use these strategic documents when defining and implementing your business model.
How To Do A Pestle Analysis | Step 1
Create your PESTLE Analysis header
Introduce your analysis by adding your company name, uploading your logo, and adding the date. You can also update the folio color scheme and background to match your company branding.
The PESTLE analysis template helps you uncover six major external factors that may affect your organization: the political, economic, social, technological, legal and environmental. This is a process that your team should continually evaluate and optimize so keeping track of the data will help align your team.
How To Do A Pestle Analysis | Step 2
Uncover your company’s political and economical factors
POLITICS: This factor represents the way and extent to which the government influences the economy, and certain businesses. This could be at the federal, state or local level. Political factors may include tax policies, tariffs, trade restrictions, corruption, funding grants, etc.
How does the government influence the economy or your industry in particular? Is the political environment stable or likely to change?
ECONOMICS: This factor refers to the areas unique to the economy that directly influence your business. Economic factors could include inflation rate, interest rates, economic growth patterns, labor costs, unemployment rates, etc. Economic factors could be both local and global.
How does the economic landscape directly impact your company? What are the long-term effects? How does each economic factor impact our pricing, revenues, and costs?
Quick Tip: Use the tag module to highlight key factors so key decision-makers can quickly scan and understand possible threats and opportunities in your environmental landscape.
How To Do A Pestle Analysis | Step 3
Determine your social factors
SOCIAL: These are demographic factors, including population growth rates, cultural trends, age distribution of population, attitudes and beliefs, lifestyle trends, etc. Many of these factors may impact the way you do business with your clients or global business partners.
What’s going on culturally? How is this affecting your ideal consumer? How does human behavior or cultural trends play a role in our business?
How To Do A Pestle Analysis | Step 4
Outline technological factors affecting your business
TECHNOLOGICAL: These factors refer to the rate of technological changes, automation, research and development and the amount of innovation going on in the market. Technological factors may influence outsourcing decisions, quality, and efficiency considerations.
What technological advancements are apparent or emerging in your market? How will they affect operations in your industry?
How To Do A Pestle Analysis | Step 5
Understand legal and environmental factors
LEGAL: Take into account both governmental and internal legal factors that affect business operations. These could include consumer laws, safety standards, tax and discrimination laws, etc.
Are there certain laws that affect your organization’s business environment? Any internal laws or legal policies? Do we understand the laws across all our markets?
ENVIRONMENTAL: Outline your geographical location, climate, your carbon footprint, environmental regulations, pollution laws, recycling policies, etc to understand how environmental forces impact your businesses and/or customer’s buying power.
How does your immediate environment impact your industry and operations? What are the effects of climate, weather or geographical location? Are we prepared for future environmental targets?
How To Do A Pestle Analysis | Step 6
Identify the implications of each PESTLE factor on your business
After uncovering each of the external factors affecting your business, individually rate each of the ideas based on the level of impact you think they will have on your business. Generally, this involves assessing their impact over time (short, medium and long-term), impact by type (positive or negative affects), and impact by dynamics; i.e. the significance/importance of the implication increasing, decreasing, or remaining unchanged.
Discuss any significant discrepancies in the ratings between departments. Ask participants to explain their rationale and ideally, have them re-rate that idea based on discussions. The more aligned you can get your team’s thinking around each factor, the better understanding everyone will have about challenges facing other parts of the organization, and the more focused your strategic planning will be.
Share your PESTLE analysis as a link, monitor and evaluate
When you’ve finished creating your user PESTLE Analysis with Xtensio’s editor, you can send the live link to your folio to share it as a responsive webpage (and add password protection), export a PDF and post it on your bulletin board and continuously optimize with new learnings. Distribute the PESTLE Analysis to relevant stakeholders. Use the report to monitor progress and as a foundation for future reviews.
Reference this and your SWOT analysis when defining and implementing your business model. And repeat the PESTLE analysis at regular intervals to stay on top of changes in the macro-environment and keep your strategies and plans up to date. The PESTLE Analysis template is adaptable just like other Xtensio tools, it can and should be repurposed, revisited, and revised regularly.