CREATING A STRATEGIC
BUSINESS PLAN USING
PESTLE ANALYSIS
An Academic presentation by
Dr. Nancy Agnes, Head, Technical Operations, Tutors India
Group www.tutorsindia.com
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Today's Discussion
Introduction
OUTLINE
Conducting a PESTLE Analysis
Political
Economic
Social
Technological
Legal
Environmental
Conclusion
INTRODUCTION
A key management approach that is effectively being used
within most modern organizations is Strategic Planning.
It has continuously enjoyed top rankings amongst five of
the most popular approaches that have been adopted by
managements across the globe .
Typically, it has been considered as an approach adopted to formulate strategy,
strategic planning comprises of components such as; a) evaluation of the mandate of
the organization, values and mission, b) analyzing an organization’s internal and
external environment, and c) identifying strategic issues on the basis of such analysis
and developing strategies, plans and goals to tackle any issues .
When an organization is keen to realize a preset goal, it is expected to formulate an
effective strategy to achieve it.
The strategy has to be such that it establishes priorities, fixes a time duration,
allocates resources, formulate mechanisms for control, allocate human resources and
it also needs to comprise of guidelines as to the manner in which every aspect will be
tackled to realize a particular goal in the most appropriate manner.
Though the organization might be very reputed, would be having a skilled and
committed team, the question here would be whether any strategies formulated might
be of use or not? It’s quite simple, all the organization needs to do is conduct a
PESTLE analysis
CONDUCTING
A PESTLE
ANALYSIS
For those who are clueless, a PESTLE analysis essentially
would refer to executing an audit of an organization’s
environment which facilitates the process of planning and
helps in arriving at strategic decisions.
It is understood that in case an organization is in a position
to audit their present environment and evaluate probable
changes, they will be in a better position than their
competitors to respond to changes .
The analysis would generally determine the most probable events that might have an
impact on the organization.
Each of the factors from PESTLE – Political, Economic, Social, Technological, Legal,
Environment would have an impact on the business plan.
POLITICAL
This factor would present the manner and level to which the
political environment of a region would impact the economy
and some organization.
This might be at the local, state or national level.
Existing considerations within the market that might influence
the organization would comprise of factors such as; probable
change in government, instability in the government owing to
the balance of power, altering policies of business and
superannuation, laws pertaining to tax, labour related laws and
trade limitations.
ECONOMIC
This factor would pertain to aspects that are distinct to the economy and have a
direct impact on the organization.
Factors that could influence the strategic plan of an organization would
comprise of rate of interest, rate of exchange, rate of inflation, prices of
property and economic growth as well.
Economic aspects would also refer to economic factors of the organization’s
geographic area.
SOCIAL
This factor essentially comprises of demographic
factors which would be inclusive of rate of growth of
population, gender and age distribution of
population, cultural facets and changes in social
behaviours.
For instance; lately social media is being extensively
utilized to discuss about products and services.
Several of these aspects might make an impact on the
manner in which organizations conduct their
businesses with their customers and the techniques
used for interacting with them.
TECHNOLOGICAL
The technological factor would refer to the rapid changes that occur in the domain of
technology, technological research and development initiatives and automation.
Such factors are instrumental in driving decisions for outsourcing, efficiency and quality
considerations.
For example; use of smart phones, artificial intelligence, emergence of location based
searching, skype meetings or mobile internet for that matter.
Over the period of the past three decades, the massive changes that have occurred in
the domain of technology has hugely impacted all industry sectors and the speed and
level that this will occur only stands to show an upward trend.
LEGAL
Legal factors would pertain to every law that is directly linked with
the organization and their domain of activity.
For instance; laws on privacy, consumer protection laws,
employment laws and laws against discrimination could certainly
influence some aspects of an organization.
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ENVIRONMENTAL
The environmental factor draws reference to every factor
that is directly linked with, determined or influenced on the
basis of the natural environment where the organization
is located.
This would comprise of weather and natural disasters,
climate changes, geographical position and sustainability.
For instance; if the location where the organization is
situated is subject to extreme weather conditions, it would
definitely make a negative impact on the organization.
CONCLUSION
All the above said factors are intricately associated with the
business and it would do well for an organization to carry out
an PESTLE analysis.
The analysis will help them to understand their external
environment and then they can formulate strategies to tackle
them while creating their strategic plan.
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