Definition of PESTLE Analysis
The PESTLE Analysis is a tool that is used to identify and analyze the key drivers of change in the strategic or business environment. The abbreviation stands for Political, Economic, Social, Technological, Legal, and Environmental factors. The tool allows the assessing of the current environment and potential changes. The idea is, if the project is better placed than its competitors, it would be able to respond to changes more effectively.
The PESTLE Analysis tool can be used for business planning, strategic planning, marketing planning, product development, and organizational planning. The PESTLE tool provides its users with factors that need to be well ...view middle of the document...
Thus, the advantages and disadvantages to the people of the area in which the project is taking place also need to be considered. These events include cultural expectations, norms, population dynamics, healthy consciousness, career altitudes, global warming, etc.
Technological: This factor takes into consideration all events that affect technology. Since technology often becomes outdated within a few months after it is launched, it is important to consider this. This factor could also take into consideration all barriers to entry in certain markets and changes to financial decisions.
Legal: This factor takes into consideration all legal aspects like employment, quotas, taxation, resources, imports and exports, etc.
Environmental: This factor takes into consideration ecological and environmental aspects that could be either economic or social in nature. These include temperature, monsoons, natural calamities, access by rail, air, and road, ground conditions, ground contamination, nearby water sources, and so forth.
Advantages and Disadvantages of a PESTLE Analysis
The advantages of using the PESTLE tool are:
• The tool is simple and easy to understand and use.
• The tool helps understand the business environment better.
• The tool encourages the development of strategic thinking.
• The tool helps reduce the effect of future business threats.
• The tool enables projects to spot new opportunities and exploit them effectively.
The disadvantages of using the PESTLE tool are:
• The tool allows users to over-simplify the data that is used. It is easily possible to miss important data.
• The tool needs to be updated regularly to be effective.
• The tool is most effective when users come from different perspectives and departments.
• The tool requires users to have access to data sources which could be time consuming and expensive.
• Much of the data used by the tool is on an assumption basis.
• The business environment is changing drastically. Thus, it is becoming increasingly difficult for projects to anticipate developments.
PESTLE Tool Usage
• List all PESTLE factors and brainstorm with experts.
• Identify the implications of each event noted in the analysis for the project. It is important to assess their impact over time, by type, and by dynamics.
• All events need to be classified by...