Market and competition
PESTEL analysis
Also called PEST analysis, PESTLE analysis
Scan the world around a business for political, economic, social, technological, environmental and legal changes that could help or hurt it.
- Time45 to 90 minutes
- People2 to 10 people
- Steps4
What it's for
Most strategy talk is about the company and its competitors. PESTEL looks further out, at forces nobody in the room controls: government, the economy, how people live and work, technology, the environment and the law. Writing them down early stops a plan from assuming the world will stay still.
The aim isn't a complete list. Finish by picking the few changes that would matter most and deciding what to do about each.
How to run it
Fill the six boxes20 min
Each person adds the changes they see in each area, one per note, with a source if they have one.
Mark the effect10 min
On each note, add whether it would help or hurt you, and roughly how soon.
Pick what matters5 min3 votes each
Vote on the changes that would affect you most.
Decide the responses15 min
For each of the top changes, what you'll do, watch or prepare.
Tips
- Write changes, not topics: 'a new privacy law in our biggest market', not 'regulation'.
- The same change often belongs in two boxes. Put it where it affects you most and move on.
Where it comes from
Francis Aguilar introduced the idea as ETPS (economic, technical, political and social) in Scanning the Business Environment (1967). Later versions reordered it as PEST and added environmental and legal factors.
Pairs well with
SWOT analysis
List strengths and weaknesses inside the organisation and opportunities and threats outside it, to see a situation before planning.
Porter's five forces
Size up how attractive a market is by looking at rivals, new entrants, substitutes, and the bargaining power of buyers and suppliers.
5C analysis
Look at the company, customers, competitors, collaborators and context together before deciding where and how to compete.