Political, Economic, Sociological, Technological, Legal, Environmental Analysis

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Political, Economic, Sociological, Technological, Legal, Environmental Analysis

There are a great number of factors, which can neither be controlled not influenced by a business, but they are of great importance for it, especially in cases which concern business planning or product development. This is why it is necessary to be aware of them, and PESTLE analysis makes it possible, as it is aimed at the analysis of external macro-environmental factors (Pergamon Flexible Learning 105).

From the very beginning it is necessary to disclose the meaning of PESTLE analysis. It is an acronym, which is decoded in the following way: P Political; E Economic; S Social; T Technological; L Legal, and E Environmental changes. This analysis may be also called PEST analysis; this term was frequently used earlier, when environmental issues were not so important as they are nowadays. Later it was legal and became SLEPT, and now environmental to become PESTLE (Cheverton 72). Sometimes they also use the acronyms PETS and STEPS, which seems to sound friendlier and more positive (Huczynski and Buchanan 45).

Cheverton also says that usually these factors, which are mentioned above, become familiar to us, when we come across them in newspapers, but as they can make a great influence on the working dynamics of our own marketplace, they prove their being very important (72).

Political factors include the changes in the political environment of the company, for instance, changes concerning taxes, changes in local, national, EU policies. Political changes may be large-scale and dramatic, like revolutions, but they do not always need to be so serious to make an influence on the environment. Economic factors include economic growth and decline, inflation, globalization, GDP, etc. Social factors may be represented by the following: demographic (age, race and gender), income distribution, lifestyles, state of health (Pergamon Flexible Learning 105). As an example of the reaction of a company to such changes, an example of Avon Company may be described. They have analyzed the statistics that showed that a great number of women in the USA are employed now, and they decided to change the orientation of their strategies from selling at home to selling at work. Technological factors mainly include new sources of energy, new materials, micro-technologies, etc. One may use such legislative or legal factor as employment law and others, and the analysis of such environmental factors as pollution, changes connected with weather and climate (Pergamon Flexible Learning 105).

The depth of PESTLE analysis may vary from surface analysis to thorough and deep analysis, depending on the requirements made. Besides, the number of factors and special analysis of certain categories of them is usually determined by the specific character of business. For instance, one of the most important factors for the companies that deal with tourism is, evidently, the ecological factor.

Drawing a conclusion, it can be said that PESTLE analysis is based on the changes. It is commonly known that changes beget challenges, but it is also evident that they beget new opportunities for business. The skill of the application of PESTLE analysis is the criteria that makes it possible to differentiate the key account manager from a traditional salesperson (Cheverton et al. 29). Practice has proved the effectiveness of the analysis of these large-scale factors, as it can help to gain numerous advantages and avoid dangerous threats in the organization of business. PESTLE will give the business an opportunity to react to the changes better than the competitors will, thus, strengthening the companys position.

Works Cited

Cheverton, Peter. Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success. London: Kogan Page Publishers, 2004.

Cheverton, Peter, Foss, Bryan, Hughes, Tim and Merlin Stone. Key Account

Management in Financial Services: Tools and Techniques for Building Strong

Relationships with Major Clients. London: Kogan Page Publishers, 2004.

Huczynski, Andrzeh and David A. Buchanan. Organizational Behavior: An Introductory Text. Harlow: Pearson Education, 2007.

Pergamon Flexible Learning. Business Environment. Oxford: Elsevier, 2005.

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