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Introduction to PESTLE Analysis

In this article we will look at PESTLE or it’s short hand version, PEST. It’s a tool commonly used to look at external factors that may influence your business. 🔍

  • Lucidity
  • 2 min read

What is a PESTLE Analysis?

A PESTLE Analysis is a framework for identifying the Political, Economic, Social, Technological, Legal and Environmental factors that could impact your business. It’s commonly presented as a six pillar structure and can be applied to any business in any industry.

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The structure of a PESTLE allows you to easily view all of the key external factors influencing your business in one diagram.

What are the advantages of PESTLE?

PESTLE as a framework has several advantages:

  • It’s simple to understand and use
  • There’s an easy process to follow through (see below)
  • You can do it on your own, as a team in person, or as a group remotely
  • It can provide a detailed but digestible view on the external factors
  • It makes people look outward at the business environment

What are some of the limitations of PESTLE?

As with every tool, PESTLE has some limitations

  • It is easy to be too broad or not factual enough, which will disrupt the PESTLE
  • It has high level detail on a lot of subjects, rather than in-depth analysis
  • It doesn’t contain a way to weight the importance of the elements of the PESTLE

How do you make the most out of PESTLE?

A PESTLE can be one of the most insightful and detailed frameworks, helping you future proof and grow your business by being fully focused to the external environment.

There are two golden rules to follow before you begin your PESTLE:

  • Prepare for the session using the pre-work below
  • Talk to your employees and get their thoughts on the business

What prework should be done before a PESTLE?

While no prework is required for a PESTLE, it is helpful to have knowledge of:

  • Current client conditions – what trends impact your customers?
  • What geography do you operate in and where are your customers?
  • Find the latest news on your industry using a system like Google News
  • Look at examples of recent sales wins and recent customer churns
  • If possible, allocate each pillar of PESTLE to different managers to research in advance of the brainstorming session
  • Any industry activity looking at tools like Crunchbase

If in a group, these can be shared via an email beforehand or presented on the day.

What's the difference between LoNGPESTLE and PESTLE?

LoNGPESTLE is the same as PESTLE with an added dimension of Local, National and Global within each pillar, allowing you to classify entries by their geographic impact. You can find out more in our guide on LoNGPESTLE.

The first concept of PESTLE, initially just PEST, is commonly cited to be Francis Aguilar who published a book in 1967 referring to ETPS.

Who invented PESTLE?

The first concept of PESTLE, initially just PEST, is commonly cited to be Francis Aguilar who published a book in 1967 referring to ETPS.

What’s the best medium for PESTLE?

PESTLE works best when put together by a cross-disciplined team either physically or virtually. You need a mix of employees with different skills and market knowledge to ensure you capture all aspects of the pillar.

What is an example PESTLE?

Many example PESTLEs can be found in the Lucidity tool such as:

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How often is PESTLE updated?

It is best practise to review your PESTLE on an annual basis, this helps provide you with the ever changing landscape you operate in and keeps all employees looking outward when making their decisions.

Now you're up to speed you can check out our guide on how to create your own PESTLE! 👍

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