Learn how to do a PESTLE analysis following a simple, three-step approach that you can use to conduct meaningful reports, every single time!
PESTLE analysis can be extremely powerful when done correctly, which is a lot easier than it sounds. In this guide, we want to make it as easy as possible for you to do a PESTLE analysis.
That's why we've created a simple, three-step approach that you can use to conduct powerful analyses and write meaningful reports, every single time!
1. Know the Categories
The first step in conducting a PESTLE analysis is understanding the PESTLE model itself — in particular, the six categories. The six broad categories of business variables that PESTLE analysis draws from are:
- Political
- Economic
- Sociocultural
- Technological
- Legal
- Environmental
Now let's discuss what you need to know about each of those categories.
Political
All businesses are affected by political factors — especially businesses that operate across borders. Broadly, political factors include taxation policies, trade tariffs, and various other rules and regulations.
Economic
The local and global economies play a large role in business, and its the economic factors of PESTLE analysis which describe that role. Examples of economic factors include Gross Domestic Product (a measure of the total value of goods and services produced across a year), exchange rates, and inflation.
Sociocultural
Sociocultural factors, sometimes referred to as just 'social' factors, account for how the societal and cultural aspects of a chosen market might affect business. These factors include age demographics, ethnicities, and cultural differences. One particularly interesting example is the prominence consumerism in a chosen demographic.
Technological
Technology is also a crucial factor in business analysis. In PESTLE analysis, technological factors can refer to the development of new technologies or the infrastructure for and access to established ones. Examples include the growing importance of cybersecurity, the widespreadness of mobile phones, and access to an internet connection.
Legal
Legal factors tend to have a large overlap with political factors in PESTLE analysis, but they broadly refer to the laws and regulations your business needs to adhere to. Examples include import and export laws or copyright laws.
Environmental
An increasingly important category is the environmental one. Whether your business is directly related to the outdoors or not, factors such as the depletion of natural resources, climate change, and pollution could very likely affect your operations.
2. Do the Research
Once you're familiar with the six categories of PESTLE analysis, the next step is to start doing your research. If you're new to business analysis, this can be a lot more difficult than it sounds. You're probably wondering what information to include in your PESTLE analysis and where to find it, but we'll answer both of those questions just now!
What Information to Include
The six categories of PESTLE analysis give you a good idea of what kind of information to include in your analysis. If you're looking for rules on which specific factors to include, there aren't any!
It's up to you to decide what information is relevant to the scope of your analysis. Our suggestion is to have a good thinking about your business, with the goal of determining which categories are most relevant to you. Once you know which categories are most relevant, you can dedicate more time and effort into finding information in those categories.
This is why a good PESTLE analysis requires a good understanding of the business or organization which you're looking at. The more you know about your business, the more relevant information you'll choose for analysis.
Where to Find Information
Knowing where to source your information or data is another tough aspect of PESTLE analysis. We've found that there's a huge amount of data available on the web, if you only search hard enough. Try Googling terms like "number of cellphone users in X country" (as a technological factor) or "global year by year economic growth" (as an economic factor).
Aside from search engines and the web, there are two other noteworthy choices for sourcing your information. The first of them is government reports, which often contain large amounts of reliable data on specific topics. The second is third party reports by specialist companies, which often cost a fair bit of money, but include reliable, industry-specific information that you might not find elsewhere.
3. Put It All Together
Once you've sourced your information, the only thing left is to put all the pieces together. Again, there's no set recipe on how to do this, but we include some suggestions on how you can write a PESTLE analysis report below.
How to Write a PESTLE Analysis Report
If we had to write a PESTLE analysis report, i.e. a single document to summarize all the findings of our analysis, here's how we'd do it:
- Create six sections for the core content. Use one section for each category, and include all the relevant factors within each section. If necessary, divide the sections up into subsections which cover bulkier topics.
- Add an introduction and conclusions. You'll find that a quick introduction which explains the goal of your PESTLE analysis is extremely useful for readers. Likewise, a conclusion section (with plenty of specific analysis, drawing meaningful conclusions from the data presented in the report) is extremely valuable.
Other Tips for Success
Here are a few more tips on how to succeed with your PESTLE analysis:
- Know your business. As we mentioned above, the content of a PESTLE analysis should be weighted towards the factors which are most relevant to your business. This allows you to keep the analysis (and the report you ultimately create) relevant. If you think an entire category of the PESTLE model isn't relevant, feel free to leave it out and focus on the others.
- Keep it simple. With vast amounts of data and a whopping six categories in the PESTLE framework, it's easy to conduct an absolute behemoth of an analysis. Unfortunately, PESTLE analyses are better kept short and sweet. This guarantees that you'll focus on relevant information, and ensures that readers will walk away from the analysis with specific, actionable ideas.
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