PESTEL Analysis is a strategic framework used to assess the macroeconomic and political environment in which a business operates. It is a widely recognized tool in business strategy and is used to evaluate the external factors that can impact an organization's operations and decision-making processes.
The acronym PESTEL stands for the following key factors:
- Political: This factor examines the impact of political influences, government policies, regulations, stability, and international relations on the business environment.
- Economic: It assesses economic factors such as economic growth rates, inflation, interest rates, exchange rates, and economic cycles that can affect a business.
- Social: Social factors look at the sociocultural, demographic, and social trends that can influence consumer behavior, preferences, and market demand.
- Technological: This factor considers technological advancements, innovation, and developments that may present opportunities or threats to a business.
- Environmental: Environmental factors pertain to issues related to sustainability, environmental concerns, regulations, and responsible business practices.
- Legal: Legal factors encompass the impact of laws, regulations, industry standards, labor laws, and pending litigation on a business.
PESTEL Analysis is a valuable tool for businesses to gain insights into the external forces that can affect their operations and strategic decisions. By systematically examining these factors, organizations can anticipate potential challenges and opportunities and develop strategies to adapt to their changing business environment. It is widely used in the United States and globally as part of strategic planning and risk assessment processes.
The Sales Glossary is a compendium of all the most commonly used terminology in sales strategy. Many of the concepts listed here are used when implementing a CRM system or a digital sales funnel, no matter if they are legacy systems or an online CRM. See also our blog that deals with sales techniques, marketing and sales culture.