PESTLE Framework:

PESTLE is a strategic analysis tool that understands external influences on a business and considers important elements of the operating environment that has an impact on the organization and its operation.

PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal.

Political: Factors determine the extent to which a government may influence the economy or a certain industry including tax policies, Fiscal policy, trade tariffs, etc.

Economic: Factors are determinants of an economy’s performance that directly impact a company including inflation rate, interest rates, foreign exchange rates, economic growth patterns etc.

Social: Factors that affect the market and community socially including cultural expectations, norms, population dynamics, healthy consciousness, career altitudes, global warming, etc.

Technological: Factors pertain to innovations in technology that may affect the operations of the industry and the market favorably or unfavorably including automation, research, and development, etc.

Legal: all legal aspects like employment, quotas, taxation, resources, imports and exports, consumer laws, safety standards, labor laws, etc.

Environmental: Factors that influence or are determined by the surrounding environment like climate, weather, geographical location, global changes in climate, nearby water sources, etc.

The major advantages to using PESTLE to analyze the business environment is that it helps to spot business opportunities, gives advanced warning of significant threats to takes actions to avoid or minimize their impact and it reveals the direction of change within one’s business environment and it’s a cost-effective methodology

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