PESTLE analysis is a popular strategic planning tool among management consultants to help their clients make informed strategic decisions. It is used to evaluate their client’s strategic position within their market, industry, and larger operating environment.
With the intensive data obtained, you can assist your clients in identifying potential opportunities and threats and ensuring their adaptability in dynamic markets.
Some areas that PESTLE analysis can have the most impact include starting a new business or industry, developing an innovative product, and evaluating marketing initiatives.
How PESTLE works
Specifically, the PESTLE analysis prepares your client’s business for external shifts using six factors: Political, Economic, Social, Technological, Legal, and Environmental.
Here is a deeper look at these six external factors to understand how the PESTLE analysis can impact a business:
Political Factors
Political factors involve issues brought on by governments, whether domestic or foreign. A business can be impacted due to government policies and legislation, trade barriers, changes in leadership, and regulatory trends. Political stability and instability can have many different effects on influencing a company’s opportunities and threats. Some areas of impact to evaluate might relate to changes in election cycles, legislation changes, fiscal policies, global conflicts, and trade agreements.
Economic Factors
Economic factors involve concerns that influence the economy’s performance and, in turn, affect business and industries. Such influences include inflation, interest rates, economic growth, and cost of living. Some areas to focus research on might be understanding the general economic climate, shifts in consumer spending, supply chain issues, and the labor market.
Social Factors
Social factors in a PESTLE analysis involve demographics, lifestyle, and consumer behaviors. Social factors include lifestyle trends, consumer profiles, attitudes, opinions, and purchasing patterns. Some areas to analyze are general product sentiment, social justice movements, health and wellness trends, and influences from current events and media.
Technological Factors
The external factors from technology involve technological changes that affect a company’s positioning. These can include research and development, data processing, AI learning, cybersecurity threats, and supply chain automation. When evaluating technological factors, consider the impacts of emerging technologies, energy usage, cloud storage, and access and reliability.
Legal Factors
Legal factors refer to how the law and regulations affect business operations. These can involve any number of laws, such as labor, consumer, health, and safety laws. They can also involve regulations of imports and exports. When evaluating legal factors that can impact a business, consider issues such as patent and intellectual rights, protection laws, occupational safety, trademarks, and licenses.
Environmental Factors
Environmental factors describe the impact on a business due to changes to our planet and ecosystem. These factors include shifting weather patterns, climate change, health crises, environmental regulations, and consumer awareness. Consider the short- and long-term impacts of issues such as natural disasters, conservation practices, alternative energies, and environmental hazards.
Using PESTLE to improve internal strengths and weaknesses
Although a PESTLE analysis identifies external opportunities and threats, it can help with strategic planning by giving your client more context about their performance and what impacts it. Therefore, it is important to understand the end goal of gaining insights that can be integrated into strategies.
Through insights learned from the six external factors, you can guide your client to integrate what they have learned to develop strategies with plans of action, budgets, innovative initiatives, and more. From the strategies, goals can be established with relevant performance indicators to improve internal strengths and weaknesses.
The Profit Enhancer Analysis is a strategic tool for measuring and tracking performance indicators. It can be a game changer for you when consulting your client following a PESTLE analysis. Help them to address external factors, seize opportunities, and avoid threats with the tools made for adapting their performance improvement strategy. Visit the Contact Us page to request a demo of the Profit Enhancer Analysis and learn more about how this software can strengthen your consulting services.