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Understanding PESTLE analysis

PESTLE, also known as PEST analysis is a term used in strategic marketing, which describes a framework of macro-environmental considerations used for the development and management of a business strategy. It considers political, economic, social, technological, legal and environmental factors and their impact on a business’s strategy. PESTLE is a method for systematically identifying and evaluating those external factors that play a large role in shaping your company’s sector of the market and its chances of business success.

Political Factors
These determine the extent to which the government and associated politics intervene in a certain industry or the economy. These may include significant changes to the business environment such as new taxes and regulations (trade tariffs, employment and environmental regulations etc.).

Economic Factors
Anything that has a major impact on the economy such as economic growth patterns, interest rates, inflation and exchange rates should be considered in this part of the PESTLE analysis. When making important strategic marketing decisions the business needs to consider the influence the economy may have on the firm’s ability to sell its products or services.

Social Factors
Cultural determinants like demographics, growth trends, health consciousness, customer attitudes, etc. affect the demand for certain products or services. Consider your marketing strategy in the context of social norms, current trends and how these trends are likely to develop over time.

Technological Factors
Consider current technology and advancements that are on the horizon. Innovations in technology can affect the firm’s operations and the market in which it operates. The business needs to consider technological factors such as automation, research and development, connectivity, e-commerce, etc.

Legal Factors
Regulators are becoming more powerful and the legislative burden on businesses is arguably greater than ever. Your team needs to consider the legal factors that will affect your business now and in the future. This could be anything from data protection regulations through to employment legislation.

Environmental Factors
These are ecological aspects such as weather and climatic changes, tourism, farming, insurance, geographical locations, etc. An awareness of the impact of these factors is crucial in order to develop and deliver an effective marketing strategy that can succeed in the environment in which the business operates.

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