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Pestle Analysis Example- a Must Analytical Tool for Every Business

The Johnson Brothers were not performing well for the past couple of years. Mr. Johnson, the mind behind the business of manufacturing woolen puppets, saw his business declining.

It is here when he thought of seeking help from me. Since I was into the profession of market study, performing SWOT analysis, PESTLE analysis, I insisted that we do a Pestle analysis.

To my surprise, I was taken aback. How can a businessman not know much about the Pestle analysis? That’s when I thought of writing it to pen.

When a marketer says, “Let us sit for a Pestle analysis”, there are many who are in a total state of confusion about its significance and the need.

Pestle analysis typically means to do the assessment of the business environment, taking into account all the factors.  Pestle analysis can be said to be a tool that benefits in analyzing and monitoring the macro-environmental factors of the company.

Although people would like to compare it with SWOT analysis, which I tell my clients too, they are a difference. In spite of both being different, yet they both run on the parallel lines- HELPING THE COMPANY THE GROWTH IT DESERVES

What is Pestle analysis example after all?

There are six external factors that according to the marketers affect your business. It comprises of –

  • Political
  • Economic
  • Sociological
  • Technological
  • Legal
  • Environmental

Thus, making up the acronym PESTLE

It is important to understand how these factors affect the functioning of the business and help you reach with the business objectives.

Factors that must be considered while taking pestle analysis example

  • Understand the duration of the impact, whether it is for a short-term or long-term basis.
  • The kind of change that has taken place in the business. This means, taking certain decisions could have brought a positive change or negative impact on the business.
  • The Pestle Analysis example also studies the rate of the impact that has brought a radical change in the functioning of the organization. This can be at an increasing rate or decreasing rate or perhaps not known too.
  • The importance of the situation is also known. This means is it critical, important, or unimportant or unknown totally.

Understanding pestle analysis example at length

Let’s take an example of an organization that is into manufacturing of automobiles. Now when the automobile company sits to do a Pestle Analysis, there will be the following points of consideration.

Considering the possible factors

When it comes to Political factor, possible factors to be considered are the international manufacturing tariffs, its restrictions, the visa requirements that are required, price controls and more.

The Economic factor to be considered will be the current situation of the nation, its inflation rate, what is the bank interest rate, the taxation level etc.

The sociological factor to consider is the cultural norms, the attitude of the buyers towards the automobiles, customer preferences, the age preference of ‘x’ designed car, which gender prefer it driving more, and so on.

Coming to the technological factor, how the emergence of new technologies has created an impact on the automobile industry, how the sales team acts and the automation process etc. are studied.

An organization also must take into account the legal part of the system such as the legislative issues, consumer protection laws, abiding by the safety laws, regulations etc.

Giving back to nature and the environment is something that every company has a responsibility to fulfill. One of the best Pestle analysis example taking the environmental factor into consideration is the sustainability, green practices, waste management and more.

Now let us study the business impact part of the Pestle analysis, where the organization undergoes a variety of factors-

Starting with the political factor, studying the several trade barriers in order to protect the domestic suppliers and working towards the fulfillment of the trading act becomes the basis of every company undergoing Pestle Analysis.

The Economic factor, on the other hand, wishes to know the strength of the overseas economy, the potential price profitability etc.

“But how does business impact go headstrong with sociology factor?”

That’s easy! Let’s say here we take an example of a trading unit for quilts. The organization if it wishes to expand its international business, it will take a note of all the other factors, such as –

  • Will the international market approve of the quality?
  • Will the products be accepted amongst the audience overseas?
  • Is the product in accordance with the style and taste of the consumers and so on?

How Does Pestle Analysis Benefit The Organization To Generate Higher Revenue?

Basically, the Pestle analysis example has helped to understand that Pestle analysis is the basis of every business strategy making and planning. It takes into account all the possible grounds and provides an accurate prediction of the performance of the company.

Therefore the main motive of undergoing the Pestle analysis is to review the strategies that have been put forth and working towards the improvement of the same. The marketers are also in a position to determine the long-term effect on the performance and other activities of the business.

Instead of getting into the market survey and long presentations, conducting a PESTLE analysis is a much better idea. You not only save a good chunk of money on the study but also get a sure shot result.

To Cut the Long Story Short,

By studying the Pestle analysis example, it enables the company to function well, keeping in mind all the external factors. The analysis works best in collaboration with other analytical tools too. Businesses often take the help of marketers, business forecasters to help them identify the problems and fix it.

The idea is to get acquainted with your business needs, the environment where it can boom well and with all the six factors in black and white, achieving the business goals become a child’s play hence.

I'm from Michigan, USA and working as Tutor at My Homework Help Since 2012. The teaching job is very challenging job, but I love to do. I'm helping students with their homework. If you need homework assistance, feel free to contact me!

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