What is a PESTEL analysis? - Oxford College of Marketing Blog

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class="fusion-page-title-captions"><h1 class="entry-title">What is a PESTEL analysis?</h1></div></div></div></div></section><main id="main" class="clearfix "><div class="fusion-row" style=""><section id="content" style="float: left;"><article id="post-8764" class="post post-8764 type-post status-publish format-standard has-post-thumbnail hentry category-marketing-digital tag-macro-environment tag-marketing-audit tag-pestel-analysis tag-strategic-audit"> <span class="entry-title" style="display: none;">What is a PESTEL analysis?</span><div class="fusion-flexslider flexslider fusion-flexslider-loading post-slideshow fusion-post-slideshow"><ul class="slides"><li> <a href="https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3.png" data-rel="iLightbox[gallery8764]" title="" data-title="Pestel analysis" data-caption="" aria-label="Pestel analysis"> <span class="screen-reader-text">View Larger Image</span> <img width="2240" height="1260" src="https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3.png" class="attachment-full size-full wp-post-image" alt="Pestel analysis" decoding="async" fetchpriority="high" srcset="https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3-200x113.png 200w, https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3-400x225.png 400w, https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3-600x338.png 600w, https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3-800x450.png 800w, https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3-1200x675.png 1200w, https://blog.oxfordcollegeofmarketing.com/wp-content/uploads/2016/06/Pestel-analysis-3.png 2240w" sizes="(max-width: 760px) 100vw, 1200px"/> </a></li></ul></div><div class="post-content"><p>A PESTEL analysis is an acronym for a tool used to identify the <a href="https://blog.oxfordcollegeofmarketing.com/wp/2014/11/04/the-impact-of-micro-and-macro-environment-factors-on-marketing/"><strong>macro (external) forces</strong></a> facing an organisation. The letters stand for Political, Economic, Social, Technological, Environmental and Legal. In this blog, we will look at what a PESTEL analysis is used for as well as the advantages and disadvantages of using it in a business setting.</p><p>In marketing, before any kind of strategy or tactical plan can be implemented, it is fundamental to conduct a full situational analysis. This analysis should be repeated every six months to identify any changes in the macro-environment. Organisations that successfully monitor and respond to changes in the macro-environment can differentiate from the competition and thus have a competitive advantage over others.</p><p>The framework is also used to identify potential threats and weaknesses which are <a href="https://blog.oxfordcollegeofmarketing.com/2016/05/26/undertaking-a-swot-analysis/">used in a SWOT Analysis</a> when identifying any strengths, weaknesses, opportunities and threats to a business.</p><p>Let’s look at each element of a PESTEL analysis.</p><h3><strong>Political Factors</strong></h3><p>These determine the extent to which government and government policy may impact on an organisation or a specific industry. This would include political policy and stability as well as trade, fiscal and taxation policies too.</p><h3><strong>Economic Factors</strong></h3><p>An economic factor has a direct impact on the economy and its performance, which in turn directly impacts on the organisation and its profitability. Factors include interest rates, employment or unemployment rates, raw material costs and foreign exchange rates.</p><h3><strong>Social Factors</strong></h3><p>The focus here is on the social environment and identifying emerging trends. This helps a marketer to further understand consumer needs and wants in a social setting. Factors include changing family demographics, education levels, cultural trends, attitude changes and changes in lifestyles.</p><h3><strong>Technological Factors</strong></h3><p>Technological factors consider the rate of technological innovation and development that could affect a market or industry. Factors could include changes in digital or mobile technology, automation, research and development. There is often a tendency to focus on developments only in digital technology, but consideration must also be given to new methods of distribution, manufacturing and logistics.</p><h3><strong>Environmental Factors</strong></h3><p>Environmental factors are those that are influenced of the surrounding environment and the impact of ecological aspects. With the rise in importance of CSR (Corporate Sustainability Responsibility) and sustainability, this element is becoming more central to how organisations need to conduct their business. Factors include climate, recycling procedures, carbon footprint, waste disposal and sustainability</p><h3><strong>Legal Factors</strong></h3><p>An organisation must understand what is legal and allowed within the territories they operate in. They also must be aware of any change in legislation and the impact this may have on business operations. Factors include employment legislation, consumer law, healthy and safety, international as well as trade regulation and restrictions.</p><p>Political factors do cross over with legal factors; however, the key difference is that political factors are led by government policy, whereas legal factors must be complied with.</p><h2><strong>How to do a PESTEL Analysis?</strong></h2><p>There are several steps involved when undertaking a PESTEL analysis. At first, it is important to get a group of people together from different areas of the business and brainstorm ideas.</p><p>Next, you will want to consult and seek the opinions of experts from outside your business. These could be your customers, distributors, suppliers or consultants who know your business well.</p><p>The third stage will involve you <a href="https://www.groupmap.com/map-templates/pestle-analysis/">researching and gathering evidence </a>for each insight in your Analysis. Then you will want to evaluate and score each of the items for ‘likelihood’; how likely it is to happen and ‘impact’; how big an impact it could have on your business.</p><p>The final stage involves refining your ideas and repeating the proves until you have a manageable number of points in each of the six categories.</p><h2><strong>Advantages and Disadvantages of a PESTEL Analysis</strong></h2><p>It is an essential analysis tool for any strategist’s toolkit but there are some benefits and challenges associated with it.</p><h3><strong>Advantages of a PESTEL Analysis:</strong></h3><ul><li>It can provide an advance warning of potential threats and opportunities</li><li>It encourages businesses to consider the external environment in which they operate</li><li>The analysis can help organisations understand external trends</li></ul><h3><strong>Disadvantages of a PESTEL Analysis:</strong></h3><ul><li>Many researchers argued that simplicity of the model that it is a simple list which is not sufficient and comprehensive</li><li>The most significant disadvantage of the model is it is only based on an assessment of the external environment</li></ul><h2><strong>Final Thoughts</strong></h2><p>A PESTEL analysis helps an organisation identify the external forces that could impact their market and analyse how they could directly impact their business. It’s important when undertaking such an analysis that the factors affecting the organisation are not just identified but are also assessed – for example, what impact might they have on the organisation? The outcomes can then be used to populate the opportunities and threats in a <a href="https://blog.oxfordcollegeofmarketing.com/wp/2016/05/26/undertaking-a-swot-analysis/"><strong>SWOT analysis</strong></a>.</p><p>If you are interested in how to successfully undertake a PESTEL analysis and how it can be used to undertake a strategic marketing audit, why not develop your marketing knowledge and skills further with the <a href="https://www.oxfordcollegeofmarketing.com/cim-courses/diploma-in-professional-marketing/"><strong>CIM Diploma in Professional Marketing</strong></a>. For more information about this qualification or the range of marketing courses from The Oxford College of Marketing, call one of our course advisors today on +44 (0)1865 515255 or email <strong>enquiries@oxfordpeg.com</strong>.</p><p/></div> <span class="vcard rich-snippet-hidden"><span class="fn"><a href="https://blog.oxfordcollegeofmarketing.com/author/redbarrington/" title="Posts by Red Barrington" rel="author">Red Barrington</a></span></span><span class="updated rich-snippet-hidden">2021-10-29T10:39:40+01:00</span><div class="fusion-sharing-box fusion-theme-sharing-box fusion-single-sharing-box"><h4>Share This Story, Choose Your Platform!</h4><div class="fusion-social-networks"><div class="fusion-social-networks-wrapper"><a class="fusion-social-network-icon fusion-tooltip fusion-facebook awb-icon-facebook" style="color:var(--sharing_social_links_icon_color);" data-placement="top" data-title="Facebook" data-toggle="tooltip" title="Facebook" 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These cookies ensure basic functionalities and security features of the website, anonymously.<table class="wt-cli-element cookielawinfo-row-cat-table cookielawinfo-winter"><thead><tr><th scope="col" class="cookielawinfo-column-1">Cookie</th><th scope="col" class="cookielawinfo-column-3">Duration</th><th scope="col" class="cookielawinfo-column-4">Description</th></tr></thead><tbody><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">_abck</td><td class="cookielawinfo-column-3">1 year</td><td class="cookielawinfo-column-4">This cookie is used to detect and defend when a client attempt to replay a cookie.This cookie manages the interaction with online bots and takes the appropriate actions.</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">bm_sz</td><td class="cookielawinfo-column-3">4 hours</td><td class="cookielawinfo-column-4">This cookie is set by the provider Akamai Bot Manager. This cookie is used to manage the interaction with the online bots. It also helps in fraud preventions</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checbox-analytics</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checbox-functional</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checbox-others</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checkbox-advertisement</td><td class="cookielawinfo-column-3">1 year</td><td class="cookielawinfo-column-4">The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement".</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checkbox-necessary</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">cookielawinfo-checkbox-performance</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">crumb</td><td class="cookielawinfo-column-3"/><td class="cookielawinfo-column-4">This cookie is set by websites that uses SquareSpace platform. The cookie is used to prevent cross-site request forgery (CSRF).</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">viewed_cookie_policy</td><td class="cookielawinfo-column-3">11 months</td><td class="cookielawinfo-column-4">The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.</td></tr></tbody></table></div></div></div></div><div class="cli-tab-section"><div class="cli-tab-header"> <a id="wt-cli-tab-link-functional" tabindex="0" role="tab" aria-expanded="false" aria-describedby="wt-cli-tab-functional" aria-controls="wt-cli-tab-functional" class="cli-nav-link cli-settings-mobile" data-target="functional" data-toggle="cli-toggle-tab"> Functional </a><div class="cli-switch"> <input type="checkbox" class="cli-user-preference-checkbox" id="wt-cli-checkbox-functional" aria-label="functional" data-id="checkbox-functional" role="switch" aria-controls="wt-cli-tab-link-functional" aria-labelledby="wt-cli-tab-link-functional"/> <label for="wt-cli-checkbox-functional" class="cli-slider" data-cli-enable="Enabled" data-cli-disable="Disabled"><span class="wt-cli-sr-only">functional</span></label></div></div><div class="cli-tab-content"><div id="wt-cli-tab-functional" tabindex="0" role="tabpanel" aria-labelledby="wt-cli-tab-link-functional" class="cli-tab-pane cli-fade" data-id="functional"><div class="wt-cli-cookie-description">Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.</div></div></div></div><div class="cli-tab-section"><div class="cli-tab-header"> <a id="wt-cli-tab-link-performance" tabindex="0" role="tab" aria-expanded="false" aria-describedby="wt-cli-tab-performance" aria-controls="wt-cli-tab-performance" class="cli-nav-link cli-settings-mobile" data-target="performance" data-toggle="cli-toggle-tab"> Performance </a><div class="cli-switch"> <input type="checkbox" class="cli-user-preference-checkbox" id="wt-cli-checkbox-performance" aria-label="performance" data-id="checkbox-performance" role="switch" aria-controls="wt-cli-tab-link-performance" aria-labelledby="wt-cli-tab-link-performance" checked="checked"/> <label for="wt-cli-checkbox-performance" class="cli-slider" data-cli-enable="Enabled" data-cli-disable="Disabled"><span class="wt-cli-sr-only">performance</span></label></div></div><div class="cli-tab-content"><div id="wt-cli-tab-performance" tabindex="0" role="tabpanel" aria-labelledby="wt-cli-tab-link-performance" class="cli-tab-pane cli-fade" data-id="performance"><div class="wt-cli-cookie-description">Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.<table class="wt-cli-element cookielawinfo-row-cat-table cookielawinfo-winter"><thead><tr><th scope="col" class="cookielawinfo-column-1">Cookie</th><th scope="col" class="cookielawinfo-column-3">Duration</th><th scope="col" class="cookielawinfo-column-4">Description</th></tr></thead><tbody><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">YSC</td><td class="cookielawinfo-column-3">session</td><td class="cookielawinfo-column-4">This cookies is set by Youtube and is used to track the views of embedded videos.</td></tr></tbody></table></div></div></div></div><div class="cli-tab-section"><div class="cli-tab-header"> <a id="wt-cli-tab-link-analytics" tabindex="0" role="tab" aria-expanded="false" aria-describedby="wt-cli-tab-analytics" aria-controls="wt-cli-tab-analytics" class="cli-nav-link cli-settings-mobile" data-target="analytics" data-toggle="cli-toggle-tab"> Analytics </a><div class="cli-switch"> <input type="checkbox" class="cli-user-preference-checkbox" id="wt-cli-checkbox-analytics" aria-label="analytics" data-id="checkbox-analytics" role="switch" aria-controls="wt-cli-tab-link-analytics" aria-labelledby="wt-cli-tab-link-analytics" checked="checked"/> <label for="wt-cli-checkbox-analytics" class="cli-slider" data-cli-enable="Enabled" data-cli-disable="Disabled"><span class="wt-cli-sr-only">analytics</span></label></div></div><div class="cli-tab-content"><div id="wt-cli-tab-analytics" tabindex="0" role="tabpanel" aria-labelledby="wt-cli-tab-link-analytics" class="cli-tab-pane cli-fade" data-id="analytics"><div class="wt-cli-cookie-description">Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.<table class="wt-cli-element cookielawinfo-row-cat-table cookielawinfo-winter"><thead><tr><th scope="col" class="cookielawinfo-column-1">Cookie</th><th scope="col" class="cookielawinfo-column-3">Duration</th><th scope="col" class="cookielawinfo-column-4">Description</th></tr></thead><tbody><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">_ga</td><td class="cookielawinfo-column-3">2 years</td><td class="cookielawinfo-column-4">This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors.</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">_gid</td><td class="cookielawinfo-column-3">1 day</td><td class="cookielawinfo-column-4">This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form.</td></tr></tbody></table></div></div></div></div><div class="cli-tab-section"><div class="cli-tab-header"> <a id="wt-cli-tab-link-advertisement" tabindex="0" role="tab" aria-expanded="false" aria-describedby="wt-cli-tab-advertisement" aria-controls="wt-cli-tab-advertisement" class="cli-nav-link cli-settings-mobile" data-target="advertisement" data-toggle="cli-toggle-tab"> Advertisement </a><div class="cli-switch"> <input type="checkbox" class="cli-user-preference-checkbox" id="wt-cli-checkbox-advertisement" aria-label="advertisement" data-id="checkbox-advertisement" role="switch" aria-controls="wt-cli-tab-link-advertisement" aria-labelledby="wt-cli-tab-link-advertisement"/> <label for="wt-cli-checkbox-advertisement" class="cli-slider" data-cli-enable="Enabled" data-cli-disable="Disabled"><span class="wt-cli-sr-only">advertisement</span></label></div></div><div class="cli-tab-content"><div id="wt-cli-tab-advertisement" tabindex="0" role="tabpanel" aria-labelledby="wt-cli-tab-link-advertisement" class="cli-tab-pane cli-fade" data-id="advertisement"><div class="wt-cli-cookie-description">Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.<table class="wt-cli-element cookielawinfo-row-cat-table cookielawinfo-winter"><thead><tr><th scope="col" class="cookielawinfo-column-1">Cookie</th><th scope="col" class="cookielawinfo-column-3">Duration</th><th scope="col" class="cookielawinfo-column-4">Description</th></tr></thead><tbody><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">IDE</td><td class="cookielawinfo-column-3">1 year 24 days</td><td class="cookielawinfo-column-4">Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile.</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">test_cookie</td><td class="cookielawinfo-column-3">15 minutes</td><td class="cookielawinfo-column-4">This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies.</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">VISITOR_INFO1_LIVE</td><td class="cookielawinfo-column-3">5 months 27 days</td><td class="cookielawinfo-column-4">This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website.</td></tr></tbody></table></div></div></div></div><div class="cli-tab-section"><div class="cli-tab-header"> <a id="wt-cli-tab-link-others" tabindex="0" role="tab" aria-expanded="false" aria-describedby="wt-cli-tab-others" aria-controls="wt-cli-tab-others" class="cli-nav-link cli-settings-mobile" data-target="others" data-toggle="cli-toggle-tab"> Others </a><div class="cli-switch"> <input type="checkbox" class="cli-user-preference-checkbox" id="wt-cli-checkbox-others" aria-label="others" data-id="checkbox-others" role="switch" aria-controls="wt-cli-tab-link-others" aria-labelledby="wt-cli-tab-link-others"/> <label for="wt-cli-checkbox-others" class="cli-slider" data-cli-enable="Enabled" data-cli-disable="Disabled"><span class="wt-cli-sr-only">others</span></label></div></div><div class="cli-tab-content"><div id="wt-cli-tab-others" tabindex="0" role="tabpanel" aria-labelledby="wt-cli-tab-link-others" class="cli-tab-pane cli-fade" data-id="others"><div class="wt-cli-cookie-description">Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.<table class="wt-cli-element cookielawinfo-row-cat-table cookielawinfo-winter"><thead><tr><th scope="col" class="cookielawinfo-column-1">Cookie</th><th scope="col" class="cookielawinfo-column-3">Duration</th><th scope="col" class="cookielawinfo-column-4">Description</th></tr></thead><tbody><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">_gat_UA-10278825-1</td><td class="cookielawinfo-column-3">1 minute</td><td class="cookielawinfo-column-4">No description</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">_mcid</td><td class="cookielawinfo-column-3">1 year</td><td class="cookielawinfo-column-4">No description</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">ak_bmsc</td><td class="cookielawinfo-column-3">2 hours</td><td class="cookielawinfo-column-4">No description</td></tr><tr class="cookielawinfo-row"><td class="cookielawinfo-column-1">CONSENT</td><td class="cookielawinfo-column-3">16 years 6 months 20 days 16 hours 7 minutes</td><td class="cookielawinfo-column-4">No description</td></tr></tbody></table></div></div></div></div></div></div></div></div><div class="cli-modal-footer"><div class="wt-cli-element cli-container-fluid cli-tab-container"><div class="cli-row"><div class="cli-col-12 cli-align-items-stretch cli-px-0"><div class="cli-tab-footer wt-cli-privacy-overview-actions"> <a id="wt-cli-privacy-save-btn" role="button" tabindex="0" data-cli-action="accept" class="wt-cli-privacy-btn cli_setting_save_button wt-cli-privacy-accept-btn cli-btn">Save &amp; Accept</a></div><div class="wt-cli-ckyes-footer-section"><div class="wt-cli-ckyes-brand-logo">Powered by <a target="_blank" href="https://www.cookieyes.com/"><img 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