The Communication Benefits of PESTLE Analysis

Any manager involved in strategic decision-making at work knows the value of facts and figures. Without such data, managers have to rely on hunches and guesswork. These are hardly ideal for strategic planning.

Managers therefore need to gather reliable facts and figures. This can take time. What’s more, other people may have to help.

This means that finding data for strategic decision-making requires a lot of workplace communication. PESTLE is a tool that speeds this up.

Acronym

PESTLE is an acronym.

P is for political

E is for economic

S is for sociological

T is for technological

L is for legal

E is for environmental

These words summarise the six aspects of strategic decision-making. Before a manager makes a decision, he or she should first think about the implications from these six frames of reference.

Brainstorming

To uncover these implications, a manager must seek advice from specialists. These specialists are colleagues who have expert knowledge in each of the six PESTLE areas. To make this process as swift as possible, a manager should call the experts to a brainstorming session.

At the session, the manager begins by explaining the topic of the pending strategic decision. He or she then asks each expert to give a fact-based opinion from the view of one of the six PESTLE areas.

Inevitably, the session participants may stray into other areas or go off the point. To control the session, the manager asks appropriate questions as follows.

Political

What are the current politics of the business environment? What political changes are coming up that may affect the organisation?

Economic

How is the economy faring? Are issues such as inflation, currency exchange rates and interest rates damaging or improving the organisation’s financial health?

Sociological

What social factors are likely to affect demand for services and products? Are consumers buying less and saving more, for example?

Technological

How is technology influencing the success of the organisation? Is there a need to upgrade or change in-house technology?

Legal

Are there any laws in the pipeline that may oblige the organisation to do things differently? Do these laws apply just to the UK or to other countries as well? Will they affect imports and exports?

Environmental

Are there environmental issues the organisation must address? If so, how should the organisation respond?

After the Meeting

When the brainstorming session is over, participants should produce factual evidence that supports the points they have made. The manager collates this evidence and writes a report.

The report discusses the options for the proposed strategic decision. It links these options to the six PESTLE areas. The aim is to arrive at a decision that is in the best interests of the organisation.

Analysis

The report becomes a PESTLE analysis. Even if the report’s conclusion is to postpone a decision, such an analysis is useful. A manager can conduct a further PESTLE analysis a few months later and compare it to the original. This will show whether conditions have changed in a decision’s favour.