A SWOT analysis often focuses on the internal workings of a company, whereas a PESTLE analysis sheds light on the external influences that might affect it. This latter form of analysis is a valuable tool that may yield intriguing insights. It involves a careful and structured look at the potential challenges and openings that come with shifts in the broader environment where a business operates.
PESTLE is an acronym representing six critical external factors: Political, Economic, Sociological, Technological, Legal, and Environmental. Sometimes a business might not fully consider how these areas impact them — for instance, how global regulations could pose a challenge to their exports or advertising efforts. Consider other elements such as fluctuating interest rates, the cost of raw materials, and currency values. What about future changes in how products are distributed, produced, or the logistics involved?
The initial step in performing a PESTLE analysis is to pinpoint the external elements that could influence a project. These elements are categorised under their respective headings. Each heading’s factors are further broken down into current influences and those that are anticipated in the future. These categorised lists then serve as a foundation for shaping various strategic and operational plans. Advocates for PESTLE analysis argue that it can simplify many strategic decisions.
I encourage looking into this topic further; there are plenty of resources available online. It’s a topic that can provide good insights for anyone interested in the complexities of how a business might navigate their external environments.