Published by MBA Skool Team, Last Updated: May 21, 2013
What is PESTLE Analysis?
PESTLE analysis, an important framework for market analysis of any organization, gives us a good picture of market growth or decline and facilitates market research, marketing planning and product development.
PESTLE is an acronym for Political, Economic, Social, Technological, Legal and Environmental. PESTLE analysis reveals the impact of these six external factors on the growth of an organization. Generally, PESTLE analysis is often followed by SWOT analysis to get a clear picture of both internal and external factors affecting the business of the organization. This analysis framework is highly effective at the time of Strategic Management Process.
A major difference between PESTLE and SWOT analysis is: PESTLE considers the external factors affecting the market of an organization while SWOT focuses on both internal and external factors affecting the organization as a whole.
Political Factors: include the Govt. policies and trade relations with other countries, labour laws, tax policy, trade barriers etc.
Economic Factors: include interest rates, economic growth rate, inflation rate, exchange rate etc.
Social Factors: include demographic characteristics like population growth rate, literacy rate, average age etc.
Technological Factors: include the R&D activities, automation level, development centres etc.
Legal Factors: include the market related laws like Consumer Protection Laws, Anti-trust Laws and regulatory mechanisms like Competition Commission of India, Courts etc
Environmental Factors: include climate, weather, geographical conditions, effect of company’s operations on environment etc.
Hence, this concludes the definition of PESTLE Analysis along with its overview.
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