PESTLE analysis

In one paragraph

A checklist for the outside world, so that a plan is not blindsided by something that was entirely foreseeable.

Political — government stability, trade policy, taxation policy, public spending, regulation of your sector.

Economic — interest rates, inflation, exchange rates, employment, consumer income and confidence. The GCSE syllabus singles out consumer income and unemployment.

Social — demographics, tastes, working patterns, attitudes and values.

Technological — automation, e-commerce, digital communication, what is becoming cheap or possible.

Legal — employment law, consumer law, health and safety, data protection.

Environmental — sustainability, waste, energy, climate-related regulation and customer expectation.

Using it properly

As with SWOT, the list is not the output. For each factor, ask three things: is it moving, does it affect *us* specifically, and what would we do about it? Most factors fail at least one of those and should be crossed out.

How to actually use it

• Do it once a year with your own numbers attached. 'Interest rates' is a heading; 'our overdraft costs £X more if rates rise a point' is a decision.
• Pay closest attention to Legal and Technological — they are the two most likely to change what you are *allowed* to do or what customers *expect*.

Where it breaks down

• It generates long lists of things you cannot influence, which can produce fatalism rather than action.
• It says nothing about likelihood or timing, and a factor is only useful if you can estimate both.

If you are being examined on it

Pick the two or three factors that genuinely bite for the business in the case and go deep. Marching through all six earns fewer marks than analysing two.

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