The Importance of Conducting a PESTLE in the Strategic Planning Process

Scanning your internal and external business environment is a great way to flush out good information for your business when developing a strategic plan for your organization. PESTLE is a strategic planning acronym that stands for Political, Economic, Social, Technological, Legal and Environmental. It primarily scans external forces that are out of your control and may have an impact on your organization in the future. It was a model developed in the late 1960’s by Francis Aguilar an accomplished Harvard professor. It was originally called the PEST model which studied the Political, Economical, Social and Technological macro-factors of a business that are external by nature. The Legal and Environmental factors have since been added by the strategic planning community and it’s been a widely used tool to extrapolate valuable strategic information for organizations since.

So, what are the differences between a PESTLE and a SWOT analysis?

A PESTLE analysis focuses primarily on external factors that are out of an organizations control. A SWOT (strength, weakness, opportunity, threat) analysis is an internal scan that primarily focuses on issues that an organization has some control over.

Below are brief touch points of a PESTLE that will hopefully help you and your strategic planning committee get the most out this valuable tool.

Political - What political factors could affect your organization in the future. Could a new elected government disrupt funding priorities, or change trade policies that could negatively impact your company? Could tariffs be introduced and disrupt foreign trade?

Economical – What economic factors could affect your company in the future? Could a bump in interest rates negatively impact your organization? Would a dramatic economic slow-down affect your organization? How about an increase in inflation?

Social - Could sociological driven forces affect your company in the future? For example, could a shift in demographics or population growth change the way you do business?

Technological – With the rapid change in technology are there any external factors that could impact your organization? Is your organization keeping up with the latest and greatest technology trends like AI? Most importantly are you staying competitive?

Legal – Are there any laws being introduced that could create future barriers to your business?

Environmental - Are there any environmental factors that could affect your business in the future? With global warming upon us are things like pollution, or emission controls factors strategically going to impact the way you do business in the future.

As a strategic planning consultant, it’s been my experience that a PESTLE should be included in your strategic planning process. We are often tied up with the daily grind of running the operations of a business, but with the many possible external factors at play - it’s a great time to take a half step back and scan all the external factors that could impact your business in the future. By doing this, you can extract excellent information for your organization and strategically come up with a solid plan to protect your business for now and in the future.