PESTEL, 6 letters for Politics, Economics,
Sociological, Technological, Ecological and Legal. The PESTEL method is also
called PESTEL analysis or PESTEL model. This concept is very common in the
entrepreneurial lingo. We usually ask for it as part of the analysis
he external opportunities and threats that can influence the evolution of a business.
The strategic analysis tool helps entrepreneurs to have an overview
on the various decisions capable of influencing its evolution. These
can be both external and internal. Zoom on the PESTEL method, we’ll
says a little more.

Understanding PESTEL analysis

as a business model, the PESTEL method makes it possible to map the
risks and different opportunities a company might face
to confront. This analysis system is indeed based on a vision of
the environment. With its 6 main components, it mainly aims to
limit commercial threats.

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The different components of the method

planned or emerging, each organization needs real management
strategic in order to expand its activities in the market. The study is carried out
according to material, human, and even intangible factors. It is therefore
capital to take this into account when making decisions within a

On the
political, social, technological, environmental and legal point of view,
the company will benefit from several advantages. Do not panic, we
will evoke below. First, it is a question of studying point by point the
different factors that make up this mode of analysis.

1. P
for the POLITICAL plan of the PESTEL method

under the PESTEL model, many factors show that the government
strongly influences the economy. This is done through its multiple decisions
policies. Whether on health, infrastructure or education of a
country, political decisions can have a real influence.

proves that the strategic management or the stability of a company
replaces many political factors. These include the
legislation, state stability, aid and subsidies. Note that the
law change is also part of the arena as are royalties and
barriers to trade.

2. E
for an ECONOMIC analysis of the PESTEL method

within a company, final decisions also depend on the power or
economic operations. These are actually a major factor
that can affect the business activities of a business. Even if the
quality of service is dependent on the best results, the exchange rate or
inflation figures can have a direct impact on its development. There is
also has many other economic factors. These include the rate
unemployment, interest rate, public debt …

3. S
for a SOCIAL analysis for the PESTEL method

Sensitivity of decision-makers and employees, ethnico-cultural aspects, religion, level of study … These are among others the aspects which can have a strong impact on the demand for the products of a company, but also on its mode of management. Changing these different aspects, at least adopting behaviors different from what we are used to, can bring about changes in business operations.

4. T
for a TECHNOLOGICAL analysis of the PESTEL method

major factors that can affect prices and services is generally
related to technology. As a concrete example we can cite automation,
patents, technology transfer and research funding.

5. E
for an ENVIRONMENTAL or ECOLOGICAL analysis of the PESTEL method

environmental protection issue buzzing
media. Within companies, we are no exception to this trend. Each
must integrate into its management mode decisions related to the
respect for the planet. This can be done in the context of waste treatment,
energy consumption …

6. Pros
a LEGAL analysis of the PESTEL method

business decisions also stem from respect for the law. The
multiple changes are generally made according to both local law
internationally. These are, for example, labor law and labor standards.
security matter.

Advantages and disadvantages of the analysis

Is PESTEL good for you or not? No worries, it’s about here
to give a brief overview of the advantages and disadvantages of this mode of analysis.

Benefits of PESTEL analysis

The strategic planning model has many advantages. Among them, the
simplicity of the device, better handling of activities,
excellent vigilance with regard to risks and threats.

  • Little
    money and more time

the only thing that PESTEL analysis requires is time. It is enough
to have the time necessary to complete a document provided for this purpose at
using a pen. As much to tell you right away, everyone can achieve a
analysis like this and allow his business to reap excellent

  • Of the
    understanding for sure

had not been the PESTEL model, internal and external events could
affect the business would go unnoticed. As an example: let’s take
the deployment of a product on the market. Here it is possible that you
be interested in safety and consumer laws.

will not be able to say with certainty the behavior to adopt in an area
overcrowded where it will for example question of reducing its costs. This, if and only if you do not pass
by a strategic analysis. Which could result in significant losses.

when launching a product, this analysis is there to help you
project into the future. By developing strategic thinking, this model
analytics provides a deep understanding of strategic planning.

  • of the
    multidimensional benefits

broad sense of the term, PESTEL is ideal for analyzing a business in terms of
outside. However, it could be effective for marketing, products
and customer relations, etc. In doing so, analysis is a good way to
prevent potential threats to an organization, especially by
competition matters. Otherwise, it could be subject to threats
that arise without warning.

elsewhere, business opportunities are external. A study by
the external environment can be done through PESTEL analysis. Without what,
the company will find it difficult to embrace the multiple opportunities that can
strengthen its activities in the market.

you can only get these benefits if you know how to make a
PESTEL analysis. You will have a brief idea of ​​it once you have discovered
the various weaknesses of this strategic management model.

Disadvantages of PESTEL analysis

PESTEL is a necessary tool for decision-making within a
business. Although it is in demand, it has many disadvantages that can
obviously have an impact on the results. Before you get into what
whatever, we will introduce you to the weak points of this tool.

  • A number
    limited factors to explore

indeed offers 6 factors to analyze for better entrepreneurial management.
We still deplore the fact that this number is quite insufficient. The model
only offers external perspectives. However, internal factors
like the competition should not be taken lightly. Only the method
PESTEL is not enough to make decisions within an organization. In
In addition, entrepreneurs can request the SWOT model.
This makes it possible to assess the internal factors, namely threats and
possible improvements.

  • Any
    definitive fact about the different factors

whether politically, economically, socially, technologically, environmentally
and legal, the news of a country can change over seconds. Let’s take the
case of a political party that can be a leader right away and kicked out a few
minutes after; or a technology that can go out for a few
days after its deployment on the market. So each of these factors
the PESTEL analysis is sufficiently unstable; and therefore define the future
of a business can become a nightmare.

  • information
    can be mishandled

it is not excluded that the problems persist even when you have the
both factual and credible information. If the problem can arise from
the validity of the information, it can also come from a bad
data manipulation. For such an analysis, it is important to collect several
information, which you may lose during your subsequent analysis.

How to do a PESTEL analysis?

Even if the
PESTEL method requires a big investment on your side, you will be able
get there. To do this, simply collect all the information
to the various factors mentioned above. Variables that can influence your
business do not have the same value over time. Reason why you
must request data such as Internet, Press, brainstorming, prospective…

Once the
pooled data, remember to identify structural trends. With a
scale from 1 to 5, measure the impact of the different factors in order to
detect the strongest. Indeed, it is important to know if these factors
have a positive or negative influence on the business. In addition, the implementation
place of an effective commercial strategy requires taking into account
different macro-environmental opportunities.


Ultimately, it emerges from this article that the Pestel method is particularly suitable for companies wishing to do an external study. This study is useful for analyzing the opportunities and risks it may face. If it is very effective requiring less money, it however requires enough time. Many people find this to be an effective tool for any business management strategy. However, others believe it should be complemented by other tools like SWOT.

About the Author

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