Demystifying the acronym and to use it in business and in life
A strategy is necessary because the future is unpredictable.
— Robert Waterman
Good strategic thinking plays an essential role in a company’s success.
Fortunately, there are many tools available to help guide the process, and one of the most well known is a S.W.O.T. analysis.
You can read how to carry one out in our post on the topic.
One of the assumptions this tool makes is that any threats or opportunities come from external factors (i.e. things outside of your control).
For example, if you’re a soft drinks manufacturer, you might learn one day that the government has decided to introduce a sugar tax to curb obesity.
Undoubtedly, this will have a material impact on your business, and there’s very little you can do about it.
Regardless of what industry you’re in, the risk that something external will impact your business at some point is real.
So how can you better prepare for such a scenario?
One strategic tool you can use is something called a P.E.S.T.L.E. analysis.
What does a P.E.S.T.L.E. analysis involve?
A P.E.S.T.L.E. analysis is a simple model that can help you identify potential external threats to your business.
It’s used as a guide to strategic decision-making and is an acronym for the following:
Political: What political dynamics are likely to affect your business?
Factors include things like tariffs, tax policy, and political stability.
Economic: What economic factors are likely to impact your business?
Factors include the rate of economic growth, inflation, unemployment, and interest rates.
Sociological: What social shifts are likely to threaten your business?
This includes things like cultural norms, attitudes to health, population changes, etc.
Technological: What technological changes (or disruptions) might threaten your business’ viability?
