PESTLE analysis can help you identify the key external factors that might impact a new business or industry. Different factors will be more (or less) important to different types of businesses. PESTLE analysis will also help identify risk factors for the subsequent SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, which focuses on internal processes.
PESTLE factors
Factor
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Description and examples
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Political
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Political factors relate to government controls and influences over economy or industry. Examples include:
- Trade tariffs
- Conflicts
- Taxation
- Fiscal policies
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Economic
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Economic factors have a direct impact on a company’s long-term prospects in a market. The economic environment may affect pricing or influence the supply and demand model. Examples include:
- Inflation rates
- Disposable income
- Unemployment rates
- Interest rates
- Foreign exchange rates
- Economic growth patterns
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Social
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Social factors can influence when, where and how a target market engages with products and services. Social factors can include:
- Religion and ethics
- Consumer buying patterns
- Demographics Culture
- Health
- Opinions and attitudes
- Media
- Brand preferences
- Education
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Technological
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Technological factors may have a direct or an indirect influence on a company or industry. While some industries will be more affected by technology than others, innovations in technology may affect the market and consumer choices and buying power. Technological factors can include:
- Automation
- Technological development
- Patents
- Licensing
- Communication
- Information technology
- Research
- Technological awareness
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Legal
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Legal and regulatory factors can affect the policies and procedures of a company or industry, and can control employment, safety and regulations. Legal factors can include:
- Employment laws
- Consumer protection
- Industry specific regulations
- Regulatory bodies
- Environmental regulations
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Environmental
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Environmental factors include all those relating to the physical environment. While the environment is more important to some industries, such as tourism, agriculture or food production, these factors may influence a range of different industries and are worth considering. Environmental factors include:
- Climate
- Geographical location
- Stakeholder and consumer values
- Environmental offsets
- Weather
- Global climate change
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