Understanding the PESTEL Model Analysis

Although relatively simple to apply, it may be more difficult to understand its scope and its relevance in the strategic planning process of a company. The PESTEL Model Manager allow practical understanding of the business environment of a company and use the data to make decisions. PESTEL model can be defined as the examination of the factors surrounding the company (Political, Economic, Sociological, Technological, Environmental and Legal). Notice that the first letter of each word form factor PESTEL, it is not a coincidence!

Specifically, the PESTLE model is a tool that allows managers to understand the business environment of a company by identifying current and future risk issues, and the ability of the company to respond to those risks. We now define individually each element of the PESTEL model Analysis or PESTEL Analysis or PESTLE Analysis or PEST Analysis in short.


The political factor contains all the elements that link with municipal, provincial and federal policies present in the business environment. stability and the current political situation as we find it, and tax policies in place, monetary policies in strengths, etc. It is one of very important factors to analyze to understand the current situation of the company.


The economic factor is essential to a proper understanding of the results from the PESTLE model. This factor will contain items related to economic growth, inflation and interest rates in force and the exchange rate. Concretely, what is considered a macroeconomic factor that has an impact on the business will be contained in this element.


The social aspect of PESTEL model will contain all the elements related to culture, demographics and the evolution thereof over time. Some of the elements contained in the social category can be very broad and other very specific, we need only remember that the elements must have an impact on the business environment of the company. Examples of items that can be contained in this category would be the aging population, the consumption patterns of a segment connected to the business, current trends, the health of the general population, etc.


The technological aspect will house all items that have a more or less strong link with innovation inside and outside the company, research and development, the internet, social networks and technologies information technology (IT) in the company.


This category of PESTEL Model will contain all the ecological elements such as pollution, recycling, regulations in strengths, global warming, etc. Also featured are more general factors such as climate, natural disasters and technological advances in the field of renewable energy.


The latest model category includes all legal and legal elements that affect the company. One can think of safety standards and production in the corporate sector, the right of employees, the particulars relating to lease agreements, acquisition and merger.

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