Can I Offer You Some Feedback? - Episode #109
Show Notes:
This week’s Business Bite breaks down the PESTLE model – a powerful strategic analysis framework. Sara provides an overview of the six external factors that can impact any organization, and shares why this model is essential for understanding the broader context of your business operations. Subscribe for new weekly episodes!
Below we are offering a transcript of the podcast for accessibility and reference.
Episode #109: Business Bites: PESTLE Model
Welcome to Business Bites. My name is Sara. This is the podcast for busy professionals who want the quick hits of business terminology, historical context, and strategies for integration. Today, we'll be talking about the PESTLE model, a framework for analyzing external factors that can impact your business. The PESTLE model is a strategic analysis tool. The PESTLE model is a strategic analysis tool that examines six external factors that would affect an organization, political, economic, social, technological, legal, and environmental. It helps to ensure that the organization is understanding the broader context in which the business operates. When we think about these outside influences,
When we think about these outside influences on your business, it's important to remember that these specific categories might have an impact on your business at different times during the year. When we're thinking about political, for example, whether or not your business is directly connected to politics, something like tariffs might impact your business in the long run. And you need to think about that in regards to your climate, in regards to your supply train strategy.
Or for example, let's say we're talking about environmental. For example, in your area where your headquarters are located, perhaps individuals no longer have access to free and clean water. This might be an issue that might affect your organization at one location, but not at another. An environmental factor can have a larger impact on the business.
The PESTLE model evolved from earlier frameworks that were used in strategic management. It became popular in the late 20th century as businesses sought to find a comprehensive way to analyze the external factors that impacted their operations. Of course, there were internal factors that impact operations, but there were outside forces that were also impacting the way that employees worked, as well as customers, came to the business.
Let's look at two examples related to the PESTLE model. Let's say you're an organization that's looking to enter a new market. You would use the PESTLE model to analyze, for example, what political stability looks like in the market that you're looking to enter. What are the economic conditions of the different communities or regions that you're looking to go into? What are some of the social trends that you might need to consider as it relates to your product or services?
Are there technological advancements that might have an impact on how you deliver your services? Are there new legal regulations which may change the way you're able to deliver your services? And lastly, thinking about any environmental factors in that market which may have an impact. An environmental factor, for example, might be if you're a business looking to expand in California, you better do your research. On environmental factors, that are going to impact the way you do your business in California. But that's a discussion for another day. The second example we're going to talk about is thinking from a risk management perspective. You're an organization looking to identify potential risks from external factors using the PESTLE model. This might address looking at changes in legislation and how they may impact your organization from a risk perspective and what are some of the liabilities that you might have.
What happens if your organization faces an economic downturn? Not something that you directly control, but definitely something that impacts you and your customers. Or thinking about environmental regulations, which may be coming and you need to prepare for as part of your business continuity plan. These are things to consider when you are trying to get started with PESTLE, and I've got two ideas to share with you. The first thing to do is to gather relevant data.
You need to have up-to-date information for each of the six PESTLE categories. This data is crucial for your comprehensive analysis and accurate assessment of external factors. For example, if you're coming to the table with, well, we know how things are hard in this particular region, that doesn't tell us what we need to know. We really need to know what are the specific barriers and how we might go about addressing them.
Another tip for using the PESTLE model is reviewing it regularly. Regularly reviewing and updating your PESTLE model gives you a chance to reflect the changes that are in your external environment. Especially nowadays, with social media and a lot of changes occurring quickly both in the legislation and political environments, organizations need to be on top of these specific external changes. This ensures that our strategic plans remain relevant
This has been Sara with Business Bites. You can reach me at podcast@mod.network. We would love to hear from you on what other terminology you'd like bite-sized. As always, give us a quick rating on your platform of choice and share this podcast with a friend. We'll see you next time.