PESTLE analysis is a favourite amongst lecturers looking to assess their student’s abilities to critically analyse a subject. Because of this, as a student, it is more than likely that you will come across at least one assessment where a PESTLE analysis is required. Don’t worry, it’s simpler than it looks!

What is PESTLE?

Imagine you’re tasked with analysing a UK-based company in the apparel industry, after which you must conclude whether this company should expand abroad. What factors would you need to consider, to reach this decision?

PESTLE analysis is a tool used to identify and understand the external factors that can impact a project, organisation, or even a decision. The acronym stands for Political, Economic, Social, Technological, Legal, and Environmental factors and, by examining these six areas, you can gain a broader understanding of the environment in which an organisation operates, helping you make better-informed decisions.

TIP! - Academic journals are a great source of information that can be used to back up your claims. Also, don’t forget to check your organisation’s official website, as most organisations tend to have unrestricted access to annual reports that can be used as an origin for your arguments!

Breakdown of PESTLE

1. Political Factors

Definition: These refer to how government policies, regulations, and political stability impact an organisation or project.

Use: Identify the political conditions or government actions that could influence your subject.

Examples:

- Government funding for the industry that your given organisation operates within

- Changes in immigration laws that could potentially affect the available workforce or individuals with specific skills

- The political stability of the country; political instability is likely to shorten policymakers’ horizons and lead to inadequate, short-term policies and more frequent switches of policies, creating volatility and thus, negatively affecting a country’s economic performance

- Policies that can affect your organisation’s industry, such as textile imports for the garment industry, GDPR and privacy policies in technology, health & safety regulations in the care industry, and many more

2. Economic Factors

Definition: These involve the state of the economy and how economic conditions impact the subject.

Use: Examine how economic trends, financial conditions, and funding availability affect your analysis.

Examples:

- Economic growth or decline of a country

- Inflation and its effect on the cost of products

- Job market demand for graduates in certain fields

- Cost of living and consumer spending

3. Social Factors

Definition: These relate to cultural trends, demographics, and social behaviours that can influence the subject.

Use: Consider how social attitudes, trends and behaviours could impact the project or organisation.

Examples:

- Consumer trends and tastes 

- Changes in demographics, such as age, ethnicity, or socioeconomic background

- Buying/purchasing habits that could affect the demand for a product

- Lifestyle factors; consumers are gradually becoming more conscientious and turning towards sustainable products or organisations that care for the environment

4. Technological Factors

Definition: These focus on the technological innovations and advancements that could affect the organisation you are writing about

Use: Identify how technological changes might present opportunities or challenges for your chosen business

Examples:

- Innovation within the industry and how it is progressing

- The impact of artificial intelligence and automation on job markets, influencing the way jobs are performed/the skills needed/ decreasing the required labour

- Investments in research & development and technology

- If the organisation is tech-orientated or uses software to collect/store/analyse data, cybersecurity is a potential risk that needs to be considered

5. Legal Factors

Definition: These involve the laws and regulations that may influence how a project or organisation operates.

Use case: Look at how legal requirements or potential changes in laws could affect your analysis.

Examples:

- Data protection laws like GDPR, regulate how organisations handle consumer information

- Intellectual property laws 

- Health and safety regulations, especially for fields with hands-on lab work.‍

6. Environmental Factors

Definition: These are related to the environment and how sustainability or environmental changes could influence the subject.

Tip: Explore how environmental concerns might impact the organisation or project and its future development

Examples:

- Environmental restrictions imposed by in-country governments

- Impact of climate change on the resources available that are needed by the organisation to manufacture their products - for example, chocolate manufacturers like Cadbury will have to pay more to source cocoa due to the recent decline in the health of cocoa trees as a result of droughts

- Environmental regulations that businesses must follow (e.g., waste disposal, energy use)

TIP! - Not all of the factors listed above will be relevant to the subject you are writing about. Even so, it is important to pick the relevant factors and, analyse both the advantages and disadvantages they can present.

Why Use PESTLE Analysis?

PESTLE analysis helps you to evaluate the external environment of a project or organisation systematically. By understanding these six factors, you gain insights into potential opportunities and challenges that could arise due to external influences. For students, PESTLE analysis is an excellent tool for deepening your understanding of how external factors can shape outcomes in various academic and real-world situations.

How to Conduct a PESTLE Analysis

1. Define the Objective
   • Clearly define the subject you want to analyze. It could be a university program, a business venture, or even a social issue. Understanding what you’re evaluating will help guide the analysis process.
2. Research External Factorssome text
   • Gather information about each of the six PESTLE factors. You can use news reports, academic articles, government publications, or industry reports to collect data.
3. Categorize the Factorssome text
   • For each of the six categories, list the relevant external factors affecting your subject. Try to be as specific as possible and identify both positive and negative impacts.
4. Evaluate the Impactsome text
   • Once you’ve listed the factors, assess how significant they are. Are some more impactful than others? Which ones present the most pressing opportunities or threats?
5. Apply the Findingssome text
   • Use the insights from your PESTLE analysis to support your arguments or develop strategies for your assignment. Consider how each factor influences the others and what actions can be taken in response.

TIP! - If you’re unsure of what to include in your analysis, you can also turn to our AI Essay Generator for some relevant points!

A PESTLE analysis provides a comprehensive view of the external factors that can influence a project or organisation. By analysing Political, Economic, Social, Technological, Legal, and Environmental factors, you gain valuable insights that can enhance your decision-making and strategic planning.

For university assignments, PESTLE analysis helps to identify both opportunities and threats in the broader environment, leading to more informed conclusions and strategies. With practice, you’ll be able to apply this framework effectively in different academic or professional scenarios.

‍