Objective:
- The learner will be able to understand the concept of PESTLE ANALYSIS
- The learner will be able to complete a PESTLE Analysis for a business
Overview:
PESTLE is a useful strategic planning tool. It provides businesses with a framework to analyse and keep track of the ever changing wider environment in which they operate. Its use is both appropriate at the pre- start business planning stage and for established businesses.
Activity:
This activity involves explaining PESTLE using examples followed by an interactive exercise where learners apply the PESTLE framework on an organisation.
- What is PESTLE
Each letter of PESTLE denotes a factor in the environment that has an influence on business, as follows:
PESTLE FACTOR | EXAMPLE | Example of a possible negative business influence | Example of a positive business influence |
Political | How a government will influence the economy i.e. Policies, initiatives, taxes, duties, trading policies and tariffs etc. EU directives and changes in EU membership, International relations (war, trading sanction, trading agreements) | A company that exports a product to a country where political unrest results in an export sanction. | A government initiative involving a financial incentive to encourage home owners uptake renewable energy sources increases demand for a PV Solar Panel Installation business. |
Economic | Economic performance factors that can affect our revenue and supply and demand. i.e. inflation, interest rates, exchange rates, wage inflation, disposable income etc. | Cheaper imports of steel from China compounded UK exports being less competitive due to exchange rates indicating strong ÂŁ pound against other major currencies reduces demand for British Steel. | A travel agency enjoys increased business as exchange rates indicate a strong ÂŁ pound against the currency of many popular holiday destinations making a holiday more affordable. |
Social | Social changes can change our customer profile, influence our product and service and the way we communicate in our market place. I.e, trends, behaviours, habits, lifestyle, fashions, cultural & religious factors, population movement, migration and immigration birth rates etc. | High street clothing retailer’s sales decline due to changes in buying habits such as internet shopping | Tends from the USA and our ageing population have increased the market for cosmetic surgery. |
Technical  | New technological advances  that influence the way that we need  operate and communicate to stay competitive as well as provide direct business opportunities i.e research and development (new manufacturing techniques, robots, new product development etc ) social media, communication, security technology etc. | A small business can cut advertising costs by using social media to reach its market. | Bookshops see a decline in sales following the introduction of the Kindle and other tablet based technology. |
Legal | Legislative changes that businesses will need to meet i.e health and safety legislation, employment law, licenses, trading laws, environmental legislation, specific standards etc. | A market leading tooth whitening product becomes illegal as its formula does not meet new legislation introduced. | A construction company who complies with a new quality standard introduced can work on government backed programmes. (It has less competition as standard is timely and expensive to obtain) |
Environmental | Changes in the environment that can affect the business such as issues associated with the effects of climate change on weather conditions, loss of biodiversity (reduction in certain plants and species).Pollution. | Climate Change has provided favourable grape growing conditions British Wine Producers to increase supply. | Decline in the Honey Bee population has reduced production of honey manufacturing. |
Split the group up into sub groups of 4-6 people. Ask each group to choose a business type from below and complete a PESTLE for the type of business they have chosen.
- A Supermarket
- A British Wine Producer
- A Cosmetic Surgery business
- A Travel Agency
- A High Street Boutique (choose ladies or gents)
Each group should write the PESTLE on a flip chart and present back to the full group for discussion. The activity should take 30 mins writing the PESTLE and 30 mins presenting it.
NB .This activity can also be delivered working with an individual or a group who are setting up or who already run their own business. In this case they would develop a PESTLE on their own organisation.
Skill Development:
The primary skills required to develop a PESTLE Analysis are analytical & research skills. Also this task develops debate and presentation sills.
Resources:
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- OHP for PESTLE Table
- Pens
- Flip Chart