Introduction To PESTLE Analysis | Understand Key External Factors That Influence Your Organisation

Business success largely depends on the strategy, organisational structure, employment policies, and other internal factors that the organisation has full control of and can work on their improvement to enhance its performance.

However, the growth or decline of business will also depend on external factors that are out of the organisation’s reach, so it can’t control them.

This is not necessarily a bad thing as, in addition to causing significant threats, the changes in the business environment can also create meaningful opportunities for businesses to grow and develop. 

For example, new technologies may create an opportunity to improve the production process or help the company reach new customers, while shifts in government policies can open up previously inaccessible markets. On the other hand, these external movements can have a negative effect and change the environment for the worse, shrinking the market, creating more competition, or increasing interest rates.

So, not everything will be in the hands of business. Still, what businesses can do is explore and analyse those external factors, so they can understand how and why that happens. 

Understanding the environment a business operates in helps an organisation make the best decisions for the future, gain valuable insight into the big picture forces that are in play in a particular industry, and identify the specific opportunities and threats that may have a positive or negative impact on the company’s operation. 

One of the most powerful an organisation can use to make sense of these external factors and adapt to the current and future business environment is the PESTLE analysis technique.