Pestle Analysis Essay
We are adding new titles every month, so don’t forget to check our website regularly for the latest releases. Visit http://www. Free-management-eBooks. Com Today’s organizations tint themselves operating in an environment that is changing faster than ever before. The process of analyzing the implications of these changes and modifying the way that the organization reacts to them is known as business strategy. ‘Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of sources and competences’ Johnson et al. (2009).
While your role as a manager is unlikely to require you to make decisions at the strategic level, you may be asked to contribute your expertise to meetings where strategic concerns are being discussed. You may also be asked to comment on pilot schemes, presentations, reports, or statistics that will affect future strategy. Presentations Pilot Schemes Meetings Reports How you participate in strategy Statistics Whether you work in a large multinational corporation or a small organization, a good understanding of the appropriate business analysis techniques and terminology will elf you to contribute to the strategic decision-making processes. Internal capability to respond External environment Analyze Assess Assist Implementation of
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Strategic Planning Analysis External Environment PESTLE, porters 5 Forces Definition Internal Capability SOOT, Insofar ton Box The diagram above shows where five widely used business analysis tools fit into the strategic planning process. This series of eBooks will give you a solid understanding of how these tools can be used, as well as an appreciation of their limitations. ISBN 978-1-62620-998-5 www. Free-management-eBooks. Com 5 This knowledge will enable you to take an active and productive role when asked to participate in the strategic decision-making process. Key Points
You may be asked to contribute your expertise to meetings where strategic concerns are being discussed. Typical scenarios where you could be asked to provide information for strategic decision making include: analyzing the organization’s external environment, assessing internal capabilities, assisting strategy definitions, and aiding in the implementation. All organizations need to identify external factors within their environment that could have an impact on their operations. Many of these will be things that the organization has no control over, but the implications of which need to be understood.
A popular tool for identifying these external factors is the PESTLE Analysis, which can be used to help you consider Political, Economic, Social, Technological, Legal, and Environmental issues. Political Economic Social Technological Legal Environmental PESTLE Analysis This process of identification should involve a variety of different disciplines across your organization so that a full picture of these external factors can be built up. These factors can then be fully researched and analyzed. As organizations become more globalizes, expanding their existing borders, the
PESTLE technique ensures that they thoroughly question each of these factors and consider their impact. The PESTLE Analysis provides you with a framework that enables you to investigate your external environment by asking questions for each factor and discussing the likely implications. These are the types of questions you would ask: What are the key political factors? What are the important economic factors? What cultural aspects are most important? What technological innovations are likely to occur? What current and impending legislation may affect the industry?
What are the environmental considerations? How you categorize each issue raised is not important when using the PESTLE technique because the aim of this tool is simply to identify as many factors as possible. For example, whether you classify an impending government regulation as a Political or Legal issue is not important. The only thing that matters is that it is identified as potentially having an impact on your organization. The PESTLE tool is a powerful technique for analyzing your environment but it should represent Just one component of a comprehensive strategic analysis process.
The PESTLE factors, combined with external micro-environmental factors and internal drivers, can be classified as opportunities and threats in a SOOT Analysis. If the PESTLE analysis identifies factors that require internal changes to your organization, then these will need to be investigated further using tools like the Boston Matrix. If you are unfamiliar with these or would like to understand them in greater detail then visit our website www. Free-management-eBooks and see our range of Strategy Skills eBooks. 7 Use a PESTLE Analysis when: Launching a new product or service
Entering a new region or country Considering a new route to your market Working as part of a strategic project team As a manager, you are most likely to be involve in these sorts to discussions when your organization is: 1. Planning to launch a new product or service 2. Exploring a new route to market 3. Selling into a new country or region It is also a useful technique to know if you are part of a strategic project team. In all of these instances, there is a need to assess the potential impact of external factors on your organization, from both an operational and a market perspective.
The ranking of each of these factors within the six categories may vary because different organizations have different priorities. For example, organizations that sell to consumers tend to be more affected by social factors, whereas a global defense contractor would tend to be more affected by political factors. Additionally, factors that are more likely to change in the future or are more relevant to a given company will carry greater importance. A company that has borrowed heavily, for instance, would need to focus more on the economic factors.