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The PESTEL Analysis

The PESTEL analysis is a business strategy analysis, which highlights the political, economic, sociological, technological, ecological and legal fields. It is above all, a marketing tool used by companies to determine what influence the environment can globally have on their activities.

The PESTEL Analysis

Photo Credit: Unsplash Tyler Franta

What does PESTEL stand for?
Who created the PESTEL analysis?
How to do a PESTEL analysis?
When to perform a PESTEL analysis?

What does PESTEL stand for?

This analysis also makes it possible to measure what impact the environment can have on a group and to highlight the change in consumer habits with regard to a particular activity.
Thus, the political domain corresponds to everything that is domestic, fiscal or societal politics.
The economic environment corresponds to the different economic cycles, to the evolution of figures and global results.
The sociological field concerns consumers and their habits, needs and expectations.
The technological side concerns new discoveries, future innovations and the use of new technology by the companies in question.
Ecology concerns questions relating to the protection of the planet, waste treatment, energy savings, etc.
Finally, the legal field concerns legal texts, labour law, consumer law and various questions of standards and safety.

Who created the PESTEL analysis?

Originally the PESTEL matrix dates from around sixty years ago.
Francis Aguilar originally came up with the concept, which he explains in a book published in 1967.
Other authors appeared in the 80s such as Narayanan, or Renfro.
Several acronyms can be found in history, but the most widely used in business economics remains the one we use today.

How to do a PESTEL analysis?

To perform an effective PESTEL analysis, it is, first of all, a matter of making a list of all the factors external to the company and placing them in the right boxes/categories (political, economic, etc.).
The analysis should highlight all of the factors that are most important to the business, ultimately it is about defining which ones are opportunities and which are threats to the group. This analysis will serve as a study for the development of a new strategy focused on a particular area.
Indeed, whether it is during a business opening or during a particular group expansion project, for example, it is essential to take into account all environmental factors, especially in a society where competition is developing in all areas of activity exponentially.
The PESTEL analysis takes into account everything relating to new technologies, including digitisation, which occupies an increasingly important place in current companies and which has forced companies to develop new concepts of customer loyalty in particular.

When to perform a PESTEL analysis?

Logically, a PESTEL analysis is not carried out alone. It is supplemented by the SWOT matrix, which highlights strengths and weaknesses, but also opportunities and threats.
It is carried out during a strategic review when the company is wondering whether it is necessary to change the group's marketing strategy and if so, in what way, in order to make it more effective in the long term.

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