PESTLE Factors

PESTLE is a simple framework that helps understand the big picture of the Political, Economic, Socio-Cultural, Technological, Legal and Environmental factors of the environment we are operating in. It can be used in conjunction with SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

Some examples are:Political -Trading policiesFunding, grants and initiativesInternational pressure groupsGovernment policiesGovernment term and changeElectionsInter-country relationships/attitudesPolitical trendsGovernmental leadershipGovernment structuresInternal political issuesShareholder/ stakeholder needs/ demands

Economic -Home economy situationHome economy trendsOverseas economies and trendsGeneral taxation issuesTaxation changes specific to product/servicesSeasonality/weather issuesMarket and trade cyclesSpecific industry factorsMarket routes and distribution trendsCustomer/end-user driversInternational trade/monetary issuesDisposable incomeJob growth/unemploymentExchange ratesTariffs (i.e. duties)InflationInterest and exchange ratesConsumer confidence indexImport/export ratios

Production levelInternal financeInternal cash flow

Social -Consumer attitudes and opinionsMedia viewsLaw changes affecting social factorsBrand, company, technology imageConsumer buying patternsMajor social events and influencesBuying access and trendsEthnic/religious factorsAdvertising and publicityEthical issuesDemographics (age, gender, race, family size,)Lifestyle changesPopulation shiftsEducationDiversityImmigration/emigrationHealthLiving standardsHousing trendsFashion & role modelsAttitudes to workAttitudes to people doing certain types of workLeisure activitiesOccupationsEarning capacityStaff attitudesManagement styleOrganizational cultureChanges to education system

Technological -Competing technology developmentResearch fundingAssociated/dependent technologiesReplacement technology/solutionsMaturity of technologyManufacturing maturity and capacity

Information and communicationsConsumer buying mechanisms/technologyTechnology legislationInnovation potentialTechnology access, licensing, patentsIntellectual property issuesGlobal communicationsInventionsInnovationsNew discoveriesEnergy uses/sources/fuelsRate of obsolescenceCollaboration toolsSoftware changesLearning

Legal - Current/future legislationLocal/national/international legislationRegulatory bodies and processesEnvironmental regulationsEmployment lawConsumer protectionIndustry-specific regulationscompetitive regulations

Environmental -EcologicalEnvironmental issuesEnvironmental regulations

Source: (http://pmpost.blogspot.com/2008/02/pestle-analysis.html)

Changing external environment (Example)

Voluntary organisations are finding themselves working in a very challenging environment. Pressures are being put on how they deliver services as well as how the organisation is governed and managed. Voluntary organisations do not live in a vacuum, and must react to these pressures and at times be ahead of the game to survive and flourish.

These are all pressures from the external environment. One model for looking at the external environment is a BPEST analysis. This is where you review the external influences on the organisation within each of five areas:

B: BusinessP: PoliticalE: EconomicS: SocialT: Technological

The organisation can then identify ways in which it can flourish as a result of these pressures or try to overcome them.

ExampleThis is an example of a BPEST analysis for a typical voluntary organisation.

Business• Competitors exist for funding.• Finite resources to deliver services.• More service users than the services available to them.• More voluntary organisations providing statutory services and winning contracts from the public sector.

Political• Greater recognition and scrutiny from government.• Changes in policies and funding arrangements with Government agencies• Changes in policies, relationship and funding arrangements with local government.• Developing relationship with new Local Health Board.• Importance of working in partnerships.

Economic• Funders less willing to fund ‘core’ services.• Pressure from staff for increased salaries and terms and conditions of service in line with competitors.

Social• Greater demands from service users for more individually tailored services.• Growth of the voluntary sector and competition for trustees and volunteers.• Increasing pressure for accountability and quality.• Increasing pressure to take account of diversity issues.• Increasing requirement to work towards reducing social exclusion.

Technological• Expectations for organisations to be using new technologies.• New technologies remove geographical barriers.

It is important for voluntary organisations to think about the needs and expectations of its stakeholders and the changes it faces from the external environment.