Pestle analysis a brief understanding of the concept used in management.

1. STRATEGIC MANAGEMENT
ENVIRONMENT SCANNING
PESTEL ANALYSIS

2. HISTORY
In 1967, Francis Aguilar an American Scholar and Harvard Professor– expertise in strategic
planning published a book titled “Scanning the Business Environment” mentioned and
discussed the environmental factors affecting a business. He gave an abbreviation “ETPS”
formed from the initial letter of “Economic, Technical, Political, and Social” factors.
In the early 1970’s, Arnold Brown focused on “STEP” (Strategic Trend Evaluation Process) and
outlined the environmental factors as STEPE (Social, Technical, Economic, Political and
Ecological).
After 1980, environment factors was defined in many ways resulting in PEST, PESTLE, STEP
and STEEPLE analysis.
In the second half of 20th century, PESTLE analysis was known.

3. VARIANTS
VARIANTS THAT BUILD ON THE PEST FRAMEWORK
STEPE – PEST + Ecological factors.
 DESTEP – PEST + Demographic and Ecological factors.
 SPELIT – PEST + Legal and Intercultural factors (popular in the US since the mid-2000s).
 PMESII-PT - A form of environmental analysis which includes political, military, economic,
social, information, infrastructure, physical environment and time aspects in a military
context.
 STEP = PEST in more positive approach.
 PESTEL = PEST + Environmental + Legal
 PESTELI = PESTEL + Industry analysis
 STEEP = PEST + Ethical
 SLEPT = PEST + Legal
 STEEPLE = PEST + Environmental + Legal + Ethical
 STEEPLED = STEEPLE + Demographic
 PESTLIED = PEST + Legal + International + Environmental + Demographic

4. INTRODUCTION
PESTLE analysis stands for Political, Economic, Social, Technological,
Legal and Environmental analysis.
The PESTEL framework is an extension of the PEST strategic
framework that includes Environmental and Legal factors that impact a
business.
The political situation in a country, technological developments,
environmental factors, the legality of actions, economics, social
factors, all play an important role.
A PESTEL analysis is a tool used to identify the macro i.e external
environment and to understand and evaluate the impact of external
factors on the business.
Organisations that successfully monitor and respond to changes in the
macro-environment can differentiate from the competition and thus
have a competitive advantage

5. POLITICAL ENVIRONMENT
Political factors is change in government policy and actions that intervene in the
economy.
Political Factors - Environmental regulations, Trade restrictions, reform, tariffs,
political stability, Taxation policies, Influential political leaders, Economic growth,
Inflation rates, Unemployment Rates, Interest Rates, Consumer Spending potential,
Bureaucracy.
Examples -
1-The launch of GST on 1 July 2017 by the President of India to bring a uniform tax
rate all over india.
2-Demonetisation in India, which affected businesses operating in this country
during 2016-2017.
3-Ban of Chinese goods/APPS in India during COVID-19 pandemic

6. ECONOMICAL FACTORS
Economic Factors are various aspects of the economy which has an impact on business. The
economic indicators are measured and reported by Central Bank and other Government
Agencies. The economy’s financial position and stability at a given time directly influence the
economy’s saving.
Economic factors - Growth rate, Interest rate, Inflation rate, Exchange rate, Availability of credit,
Level of disposible income, Propensity of people to spend, Federal government budget deficits,
Gross domestic product trend, Unemployment trend, Stock market trends, Price fluctuations
Examples –
1-In 2018, the new trade agreement between the US, Mexico and Canada for free and fair trade
shifted the demand to low-calorie drinks. It increased the retail value of its products by 8%, eg -
Zero Sugar & Diet Coke.
2-Nike operates at lower profits in countries with excessive import duties and low purchasing
power.
3-Unemployment during COVID-19 pandemic

7. SOCIAL FACTORS
Social Factors represents the demographic characteristics, norms, customs and
values of the population within which the organization operates.
Social factors - Demographics of the market, Consumer Buying Patterns,
Religious and Cultural factors, State and influence of the media, Lifestyle trends in
place at the time, Cultural Aspects & Perceptions, Health Consciousness,
Populations Growth Rates, Age Distribution, Career Attitudes, Population size and
growth rate, Birth rates, Death rates, Number of marriages, Number of divorces,
Immigration and emigration rates, Life expectancy rates, Age distribution, Wealth
distribution, Social classes, Per capita income, Family size and structure,
Lifestyles, Health consciousness, Average disposable income,, Attitude towards
work, Buying habits, Ethical concerns, Cultural norms and values, Sex roles and
distribution, Religion and beliefs, Racial equality, Use of birth control, Education
level, Minorities, Crime levels, Attitudes towards saving & investment
Examples
1-Please have started Yoga and Meditation to remain fit and Healthy.
2-Amazon and Flipcarts offering sales offer during cultural seasons and selling
product at lower price

8. TECHNOLOGICAL FACTORS
The changes in the technological environment can be either an opportunity or a threat
to the firm. These factors pertain to innovations in technology that may affect the
operations of the industry and the market favourably or unfavourably. Factors could
include changes in digital or mobile technology, automation, research and
development.
Technological Factors - Automation, R&D activity, Technological change, Access to
new technology, Technological awareness, Internet infrastructure, Communication
infrastructure, Manufacturing technology (increase in output, lowering of production
cost, etc.), New innovations, Intellectual Property, Patents,, New ways of distributing
goods and services, New ways of communicating with target markets
Example –
1-Launch of Electric Cars, Scooty, Robots
2-Launch of Solar Power Plant
3- India's first interplanetary mission of launching Mangalyaan

9. LEGAL FACTORS
This refers to the laws made by the government that the company has to
follow in order to continue its operations.
Legal Factors - employment legislation, consumer law, healthy and safety,
international as well as trade regulation and restrictions, Discrimination
laws, Employment laws, Consumer protection laws, Copyright and patent
laws, Health and safety laws, Education laws, access to materials, quotas,
resources, imports/exports, and taxation, equal opportunities, advertising
standards, consumer rights and laws, product labelling and product safety.
Example –
1-Law prohibiting businesses from using plastic bags to pack the products.
2-Prohibition of Child Marriage (Amendment) Bill,2021 that seeks to raise
the age of marriage for women to 21 years.

10. Environmental Factors
Environmental components also referred to as geographical factors, include all factors
affecting nature and ecology on business.
Growing awareness of the potential impacts of climate change is affecting how
companies operate and the products they offer.
This has led to many companies getting more and more involved in practices such as
corporate social responsibility (CSR) and sustainability to how organisations need to
conduct their business.
Environmental factors- Weather, Climate, Environmental policies, Climate change,
Pressures from NGO’s, Natural disasters, Air and water pollution, Recycling standards,
Attitudes towards green products, Support for renewable energy, waste disposal laws,
environmental protection laws, energy consumption regulation. Energy/Power
Consumption, Insurance Policies, Safe Waste Disposal, Dealing with hazardous
material, Weather Conditions, Temperature,
Example
1-CSR initiatives include carbon footprint reduction.
2- Buy less plastic and bring a reusable shopping bag.

11. THANK YOU