Nowadays, the world we live in is becoming more and more complex. Significant changes are happening frequently and managing our business at a local and / or global level is a challenging task. For this reason, the PESTLE framework is a managerial tool that helps us keep an eye on the ‘macro-environment’ and get information which might be useful to our strategic decisions.
 
PESTLE is an acronym as follows:
 
Political – Let’s think about how the introduction of a new law and / or a new taxation policy might impact our business. Would it be an opportunity or a threat? Obviously, the political stability of a country is beneficial to the organisations which work in that country and even to international ones which might decide to expand and invest in that country and not in others.
 
Economic – Organisations are influenced by the national and international economic context (e.g. inflation rates, interest rates, new economic policies, etc..). Let’s think about this for example, if GNP (gross national product) grows, this might mean that employment is high, the general income of the people is high, and this might increase the demand for goods and services.
 
Sociological – Let’s consider three factors in particular, demographics, life styles and the values of a society. This means to analyse how many people we refer to, how long they live, where they live, what they like to do, how their values have changed over time, how their life style has changed over time etc.. Sooner or later this is likely to impact our organisation.
 
Technological – Let’s consider how fast this aspect of our society is changing, how short a product life is, how quickly a product is replaced by a new more effective product. Let’s also consider how profoundly the e-commerce has changed the structure of almost all industries worldwide.
 
Legal – Legal factors impact on our organisations on a day-to-day basis (e.g. recruitment and employment laws, health and safety regulations, etc..) as much as political factors do, and they are very often operating together.
 
Environmental – Let’s think about waste disposal, energy consumption, sustainable development. These are among the most important environmental factors to take into consideration when coming to analyse our organisation. Social values are changing and we need to become more environment sensitive.
 
Last but not least, the PESTLE framework also points to the strong interrelationship among all these factors which impact on each other making our analysis a bit more challenging. However, it is still worth carrying out.