Pestle Analysis CA Foundation Notes | EduRev

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The term PESTLE is used to describe a framework for analysis of macro environmental factors. PESTLE analysis involves identifying the political, economic, socio-cultural, technological, legal and environmental influences on an organization and providing a way of scanning the environmental influences that have affected or are likely to affect an organization or its policy. ‘PESTLE analysis is an increasingly used and recognized term, replacing the traditional framework for monitoring environment known as PEST analysis.

PESTLE is an acronym for:

  • P- political,
  • E- economic
  • S- socio-cultural
  • T- technological
  • L- legal
  • E- environmental

The PESTLE analysis is simple to understand and quick to implement. The advantage of this tool is that it encourages management into proactive and structured thinking in its decision making.
Pestle Analysis CA Foundation Notes | EduRev
Pestle Analysis CA Foundation Notes | EduRev
Pestle Analysis CA Foundation Notes | EduRev
The Key Factors

  • Political factors are how and to what extent the government intervenes in the economy and the activities of business firms. Political factors may also influence goods and services which the government wants to provide or be provided and those that the government does not want to be provided. Furthermore, governments have great influence on the health, education and infrastructure of a nation.
  • Economic factors have major impacts on how businesses operate and take decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. The money supply, inflation, credit flow, per capita income, growth rates have a bearing on the business decisions.
  • Social factors affect the demand for a company's products and how that company operates.
  • Technological factors can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation.
  • Legal factors affect how a company operates, its costs, and the demand for its products.
  • Environmental factors affect industries such as tourism, farming, and insurance. Growing awareness to climate change is affecting how companies operate and the products they offer--it is both creating new markets and diminishing or destroying existing ones.

On the basis of these, it should be possible to identify a number of key environmental influences, which are in eflect, the drivers of change. These are the factors that require to be considered in the matrix. Then transpose the final items that have been identified from your list to a PESTLE matrix as shown below:
The PESTLE Matrix




Political stability

Economy situation and trends

Political principles and ideologies

Market and trade cycles

Current and future taxation policy

Specific industry factors

Regulatory bodies and processes

Customer/end-user drivers

Government policies

Interest and exchange rates

Government term and change

Inflation and unemployment

Thrust areas of political leaders.

Strength of consumer spending



Lifestyle trends

Replacement technology/solutions


Maturity of technology

Consumer attitudes and opinions

Manufacturing maturity and capacity

Brand, company, technology image

Innovation potential

Consumer buying patterns

Technology access, licensing, patents

Ethnic/religious factors

Intellectual property rights and copyrights

Media views and perception



Business and Corporate Laws

Ecological/environmental issues

Employment Law

Environmental hazards

Competition Law

Environmental legislation

Health & Safety Law

Energy consumption

International Treaty and Law

Waste disposal

Regional Legislation

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