PEST/ PESTLE Analysis Tool and Template
- ETPS - PESTEL - PESTLEE -PESTLIED - SLEPT - STEEPLE - STEP - STEPE -
The Environment Scan
The PEST or PESTLE Analysis
Originally designed as a business environmental
scan, the PEST or PESTLE analysis is an analysis of the external macro
environment (big picture) in which a business operates. These are often
factors which are beyond the control or influence of a business,
however are important to be aware of when doing product development,
business or strategy planning.
This page has been
developed to help and support anyone with activities or projects which
require use of the PESTLE analysis tool to undertake an environmental
scan of an organizations operating environment.
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It is important to take into account PESTLE factors for the following main reasons:
by making effective use of PESTLE analysis, you ensure that what you
are doing is aligned positively with the powerful forces of change that
are affecting our working environment. By taking advantage of change,
you are much more likely to be successful than if your activities
History of PEST
So where did the term PEST or PESTLE derive? What
were the origins?
The term PESTLE has been used regularly in the last 10+ years and its true history is difficult to establish.
From our research,
the earliest know reference to tools and techniques for ‘Scanning the
Business Environment’ appears to be by Francis J. Aguilar (1967) who
discusses ‘ETPS’ - a mnemonic for the four sectors of his taxonomy of
the environment: Economic, Technical, Political, and Social.
Shortly after its publication, Arnold Brown for the Institute of Life
Insurance (in the US) reorganized it as ‘STEP’ (Strategic Trend
Evaluation Process) as a way to organise the results of his
Thereafter, this ‘macro external environment analysis’, or
‘environmental scanning for change’, was modified yet again to become a
so-called STEPE analysis (the Social, Technical, Economic, Political,
and Ecological taxonomies).
In the 1980s, several other authors including Fahey, Narayanan,
Morrison, Renfro, Boucher, Mecca and Porter included variations of the
taxonomy classifications in a variety of orders: PEST, PESTLE, STEEPLE
etc. Why the slightly negative connotations of PEST have proven to be
more popular than STEP is not known. There is no implied order or
priority in any of the formats.
Some purists claim that STEP or PEST still contain headings which are
appropriate for all situations, other claim that the additional
breakdown of some factors to help individuals and teams undertaking an
Quite who and when added what elements to the mnemonic is a mystery,
but what we do know is that the actual order and words contained are
common to certain parts of the world and streams of academic study. The
term PESTLE is particularly popular on HR and introductory marketing
courses in the UK. Others favour PEST, STEP or STEEPLE.
Introduction to The PESTLE Analysis tool
analysis is a useful tool for understanding the “big picture” of the
environment in which you are operating, and the opportunities and
threats that lie within it. By understanding the environment in which
you operate (external to your company or department), you can take
advantage of the opportunities and minimize the threats.
Specifically the PEST or PESTLE analysis
is a useful tool for understanding risks associated with market growth
or decline, and as such the position, potential and direction for a
business or organization.
For the purposes of this page we will focus on the PESTLE variation of the acronym.
The PESTLE Analysis is often used
as a generic 'orientation' tool, finding out where an organization or
product is in the context of what is happening out side that will at
some point effect what is happening inside an organization.
A PESTLE analysis is a business measurement tool, looking at factors external to the organization. It is often used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and
The PESTLE analysis
headings are a framework for reviewing a situation, and can also be
used to review a strategy or position, direction of a company, a
marketing proposition, or idea. There are many variants on this model including PEST analysis and STEEPLE analysis.
Completing a PESTLE analysis can
be a simple or complex process. It all depends how thorough you need to
be. It is a good subject for workshop sessions, as undertaking this
activity with only one perspective (i.e. only one persons view) can be
time consuming and miss critical factors.
Use PESTLE analysis for business and strategic planning, marketing planning, business and product development and research reports.
The PESTLE template below includes sample questions or prompts, whose answers are can be inserted into the relevant section of the table.
questions are examples of discussion points, and should be altered
depending on the subject of the analysis, and how you want to use it.
Make up your own PESTLE
questions and prompts to suit the issue being analyzed and the
situation (i.e. the people doing the work and the expectations of
It is important to clearly identify the subject of a PESTLE analysis
(that is a clear goal or output requirement), because an analysis of
this type is multi faceted in relation to a particular business unit or
proposition - if you dilute the focus you will produce an unclear
picture - so be clear about the situation and perspective that you use
PESTLE to analyze.
market is defined by what is addressing it, be it a product, company,
organization, brand, business unit, proposition, idea, etc, so be clear
about how you define the market being analyzed, particularly if you use
PESTLE analysis in workshops, team exercises or as a delegated task. The PESTLE subject should be a clear definition of the market being addressed, which might be from any of the following standpoints:
A company looking at its market
- A product looking at its market
- A brand in relation to its market
- A local business unit or function in a business
- A strategic option, such as entering a new market or launching a new product
- A potential acquisition
- A potential partnership
- An investment opportunity
Be sure to describe the subject for the PESTLE analysis clearly so that people contributing to the analysis, and those seeing the finished PESTLE analysis, properly understand the purpose of the PESTLE assessment and implications.
PESTLE analysis template
than the main headings, the questions and issues in the template below
are examples and not exhaustive - add your own and amend these prompts
to suit your situation, the experience and skill level of whoever is
completing the analysis, and what you aim to produce from the analysis.
The context upon which a PESTLE analysis is undertaken can help to determine how to interpret facts and information discovered.
PEST/ PESTLE Analysis on ____________________(organization name) SWOT
SWOT Context ____________________ SWOT
Date of Analysis ____________ view
|PESTLE Analysis factors
||Implication and importance
list below is just to get you started. Remember to put these, and
others that you add in the context of your organization or business.
example if you are a small private company the behaviours of a Wall
Mart / Tesco or other large international player may well impact on
you are a local authority, government changes will change your
priorities. In the NHS changes to treatments and public attitudes will
also impact etc.
About your organization.
How might the factors listed on the left impact your business or part of the organization?
H - High
M - Medium
L - Low
U - Undetermined
0 - 6 months
6 - 12 months
12 - 24 months
24 + months
Political - SWOT
- Trading policies
- Funding, grants and initiatives
- Home market lobbying/pressure groups
- International pressure groups
- Wars and conflict
- Government policies
- Government term and change
- Inter-country relationships/attitudes
- Political trends
- Governmental leadership
- Government structures
- Internal political issues
- Shareholder/ stakeholder needs/ demands
Economic - SWOT
- Home economy situation
- Home economy trends
- Overseas economies and trends
- General taxation issues
- Taxation changes specific to product/services
- Seasonality/weather issues
- Market and trade cycles
- Specific industry factors
- Market routes and distribution trends
- Customer/end-user drivers
- International trade/monetary issues
- Disposable income
- Job growth/unemployment
- Exchange rates
- Interest and exchange rates
- Consumer confidence index
- Import/export ratios
- Production level
- Internal finance
- Internal cash flow
Social - SWOT
- Consumer attitudes and opinions
- Media views
- Law changes affecting social factors
- Brand, company, technology image
- Consumer buying patterns
- Major events and influences
- Buying access and trends
- Ethnic/religious factors
- Advertising and publicity
- Ethical issues
- Demographics (age, gender, race, family size,)
- Lifestyle changes
- Population shifts
- Living standards
- Housing trends
- Fashion & role models
- Attitudes to work
- Attitudes to people doing certain types of work
- Leisure activities
- Earning capacity
- Staff attitudes
- Management style
- organizational culture
- Changes to education system
Technological - SWOT
- Competing technology development
- Research funding
- Associated/dependent technologies
- Replacement technology/solutions
- Maturity of technology
- Manufacturing maturity and capacity
- Information and communications
- Consumer buying mechanisms/technology
- Technology legislation
- Innovation potential
- Technology access, licensing, patents
- Intellectual property issues
- Global communications
- New discoveries
- Energy uses/sources/fuels
- Rate of obsolescence
- Health (pharmaceutical, equipment, etc.)
- Manufacturing advances
- Information technology
- Waste removal/recycling
- Collaboration tools
- Software changes
|Additional split of information if doing a PESTLE analysis rather than a PEST analysis:
Legal - SWOT
- Current legislation home market
- Future legislation
- European/international legislation
- Regulatory bodies and processes
- Environmental regulations
- Employment law
- Consumer protection
- Industry-specific regulations
- competitive regulations
Environmental - SWOT
Remember this is only a tool. Call it what you like - use whatever factors you feel are appropriate. Other variations include:
- PEST analysis (STEP analysis) - Political, Economic, Sociological, Technological
- PESTLE/ PESTEL analysis- Political, Economic, Sociological, Technological, Legal, Environmental; PESTEL analysis
- PESTLIED analysis- Political, Economic, Social, Technological, Legal, International, Environmental, Demographic
- STEEPLE analysis - Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical
- SLEPT analysis - Social, Legal, Economic, Political, Technological
- STEPE analysis - Social, Technical, Economic, Political, and Ecological
- ETPS analysis - Economic, Technical, Political and Social - Scanning the business environment
Choose the acronym that most suits you or your organization.
When you have identified
the factors that may impact your organization, in column 2 list HOW
they would impact on your organization. When this is complete, in
column 3 indicate the extent to which each factor is a risk.
As a rule of thumb, for every HIGH risk you identify you should have at least 10 MEDIUM and 20 LOW
risk item. If you identify more high risks than low risks it may be
worth re-visiting your thoughts on what may or may not impact your
organization. Then look at the relative importance and implication of
When you have done this you are ready to start to populate a SWOT analysis (see below).
When you have collated the relevant data you need to develop an action plan with SMART objectives (Specific measurable achievable relevant time-bound or SMARTER objectives)
PESTLE Analysis on an HR department or other internal function
While the PEST or PESTLE
analysis is primarily aimed at looking at the external environment of
an organization, many HR courses ask students to use the PEST or PESTLE
analysis model to look at their own function. In this context we need
to imagine that the department (HR) is an organization in its own right
and look outside. Factors to include in your analysis may include the
- What is the culture of the organization,
- How is the HR function viewed by other functions?
- Who are the political champions of HR (or its adversaries)?
- Shareholder views
- What is the budgetary position of the department,
- Is more money available?
- Are our customers likely to spend more or less money on the services we offer?
- What is happening to the financial status of the organization
- Interest rates
- Salary trends in the sector
- Other departmental attitudes to HR
- Population shifts (age profile)
- Living standards
- Housing trends
- Fashion & role models
- Age profile
- Attitudes to career
- What changes may be coming our way?
- What new technology/ systems,
- How do we record attendance, performance? how might this change?
- Use of and encourage home working?
- Communications technologies
- changes of technology that will increase/ reduce the need for recruitment
- changes to HR software
- What is happening in our sector that will impact what we do?
- Minimum wage,
- Working time,
- Food stuffs,
- Under 18 working,
- Occupational/ industrial Training etc.
- What changes will impact the services of the organization
- Staff morale
- Staff engagement
- Need to reduce storage needs
- Management attitudes (inside dept/ function)
- Organizational culture
This is only a sample of
the types of issues you may include. Use the topics listed in the
template above to give you ideas and inspire you, just relate them to
the rest of your organization and your 'customers'.