As part of the Skill Build Assignment and some of your modules, you might be asked to do a PESTLE analysis. But what is it? This blog will give you the PESTLE basics that should help you hit that first!
The PESTLE analysis helps you understand the external environment which will affect your business idea. Each of the different letters will allow you to understand a different context and help you understand the environment better.
P is for Political issues. This could be new legistations that have been enforced, the current political situations throughout the world and government incentives such as the Big Society
E is economic issues. This includes interest rates, whether the country that you are trading in is in recession or in growth and exchange rates. All of these things effect people’s spare cash (their ability to buy your product) and, if you are trading internationally, exchange rates can have a significant impact on your business.
S is for social cultural trends. These are the hot topics of the general public at the time you conduct the analysis. This currently includes the Olympics, healthy eating, and Euro 2012. All of these things will affect certain businesses. For example, if you are opening a new salad bar in the students’ union, people are more likely to use it as there is a current trend in healthy eating.
T is for technological. This is where technology advances will have an affect on your business. For example, in the ’90s the internet had a significant impact on the way that retailers traded on the high street.
L is for legal. This is very similar to the P, but this can be more specific to your business. This includes items such as new ways to pay your business taxes and industrial disputes.
E is for environmental and ethical. This includes considerations such as fair trade, zero emissions and child labour.
This analysis should be able to help you develop your business. This external analysis will help you make sales predictions and could help with cost saving. Try it out with your business and you will be able to go far.
(thanks BritGow for the image)