Analysing the
external environment
I&E 2010
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A couple of jobs…
• Junior Designer and Junior Web Developer
– First one is a placement (1 year)
• Salary will meet national minimum wage for both
• Closing date for applications: 2nd May 2010
• How to apply: email CV and any examples of
work/URLs to
• recruitment@kmp.co.uk
• Start date: Summer 2010
• (“You should be passionate about all things
digital”)
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A research-type job:
• Demonstratorship position in UCL Interaction
Centre in UCL, London.
• This position combines a 4 year PhD studentship
along with teaching duties, for which training will
be provided. The ad and job description with
person specification can also be found on the
UCLIC website: http://www.uclic.ucl.ac.uk/.
3
A temporary job
•
Did you know that all students at Leeds Met are eligible
to apply to take a year out to run the Students’
Union? Not only is each of the five posts available paid
over £17,500 per year but they will also get tonnes of
CV boosting training and work experience!
• The five roles available are:
President
Associate President Education
Associate President Diversity
Associate President Development –
Athletic Union President
4
Layers of the business environment
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• Businesses need to understand the external
factors affecting their business and their
customers, suppliers and competitors.
– And partner firms, eg distributors
• Fundamental for this is a PESTEL analysis.
• This should represent a checklist of factors
currently affecting a business sector and
likely to affect it in future.
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Do external factors really have an
effect on businesses?
Many videos on youtube, eg
http://www.youtube.com/watch?v=B7drEvHo7vA
7
PESTEL-analysis:
Political factors
Economic
Legal
factors
factors
Environmental
factors
Socio-cultural
Technological factors
factors
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Suggested approach to PESTEL
analysis
A deep analysis would include:
An outline of the issue
A discussion of the implications for your proposed
Enterprise
How you might deal with the implications
Example: Third Sector Foresight
http://www.3s4.org.uk/drivers
Works through a PESTEL in voluntary sector
Many useful ideas/prompts
Gives idea of depth of analysis possible
Note slight difference in interpretation of PESTEL
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Our two examples
• YCFC stadium issue:
– York City Football Club
– A famous professional premiership football team fairly
close to Leeds Met
– Issue for PESTEL – should they build a new stadium, and
if so where?
• Charity websites
– Eg hungersite – thehungersite.com
– Free Rice – freerice.com
– If people visit these sites, “free” charity donations are
made
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Our two examples
• We’ll try to think of PESTEL items as we
go along.
• Moore will also suggest some
• Nota bene – this will be examples only
– There will be many others
– Research likely to be needed for assessed work
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PESTEL-analysis
Political factors
• Global, regional,local and
national .
Political parties’ differing policies
•Proximity of next election
• Taxation
• Integration with other jurisdictions
•Globalisation
•Moore – can also be “politics
with a small ‘p’”
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Politics and our examples
• YCFC:
– Local party politics – eg shall we help fund it
– Pressure groups wanting to remain where we
are
– York MP is raising it at Westminster
• Charity sites:
– Global political issues perhaps
– Digital divide?
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PESTEL-analysis
•
Economic factors
•Inflation rate
•Interest rates
• Labour costs
• Other business costs
• Private consumption
and available income
• Exchange rate
• Public finances
• consumer/business confidence
• unemployment
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Economic factors and our
examples
• YCFC:
– Expense involved in new stadium
– Cost of upkeep of current one
– Need for loans….
• Charity sites
– Many relevant factors, one example – free rice went
from 20 grains per click to 10 because of global
recession
– Some development economists think such sites may
lead to net reduction in donations
– Can it really be free? (Sandberg 2010)
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PESTEL-analysis
• Demographic factors
•population
• Changes in values/
attitudes
• Changes in lifestyle
• Attitudes toward work/
spare time
• Education levels
• Work environment factors
• Health concerns
• Changes in income distribution
• Fads and fancies.
• Media pressure
Socio-cultural
factors
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Socio-cultural factors
and our examples
• YCFC:
– Many older people (eg Moore) may find it hard to get
to new venue
– NIMBY maybe
• Charity sites:
– Patronising?
– Eg cf. sponsor a child schemes maybe
– World-wide, hence usual HCI issues
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PESTEL-analysis
• Spreading of and breakthrough
in new technology
• Research & Development (R&D)
• New materials, products and processes
• Information Communication
and Technology (ICT) changes.
Technological factors • Rates of obsolescence
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Technological factors and our
examples
• YCFC:
– Many opportunities were there to be a new
stadium
• Charity sites:
– Depend entirely on WWW access
– User profiling??
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PESTEL-analysis
• Global warming
• Pollution factors
• Green energy
• Energy conservation
• Recycling
• Natural resource
depletion
•Environmental
factors
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Environmental factors and our
examples
• YCFC:
– Current ground is in city centre, close to
railway, but traffic congestion
– New ground – outskirts of city – more cars but
perhaps less congestion
• Charity sites:
– Computer emissions?
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PESTEL-analysis
Legal factors
• Competition laws
• Labour market
legislation
• Standards
•Information disclosure
•Intellectual property laws
•Laws can be an opportunity as
well as a problem.
Eg car emission laws,
DDA
22
Legal factors and our examples
• YCFC:
– Building and planning regs
• Charity sites:
– Be aware of national laws
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Prioritising PESTEL factors
• Categorise according to predictability of
implications and impact on your enterprise
• Concentrate on those that have predictable
implications and appear to have high impact
on your enterprise
• Source: http://www.3s4.org.uk/how-to/sortdrivers
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Possible advantages (CIPD 2008)
• Simple framework.
• Facilitates an understanding of the wider business
environment.
• Encourages the development of external and
strategic thinking.
• Can enable an organisation to anticipate future
business threats and take action to avoid or
minimise their impact.
• Can enable an organisation to spot business
opportunities and exploit them fully.
25
Possible disadvantages (ibid)
• Some users over simplify the amount of data used for decisions – it is
easy to use scant data.
• To be effective this process needs to be undertaken on a regular basis.
• The best reviews require different people being involved each having a
different perspective.
• Access to quality external data sources, this can be time consuming
and costly.
• The pace of change makes it increasingly difficult to anticipate
developments that may affect an organisation in the future.
• The risk of capturing too much data is that it may make it difficult to
see the wood for the trees and lead to ‘paralysis by analysis’.
• The data used in the analysis may be based on assumptions that
subsequently prove to be unfounded (good and bad).
26
Using PESTEL
• It may well be useful in your future careers
to apply PESTEL to any suggested
innovation
• It might help re PIPE
• It will definitely help with I & E…
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PESTEL in I & E – assessment 1
You are required to develop an enterprise idea which will
usually be based upon your final year project. However, it
is possible to develop an idea that is unconnected with
your project, so long as it is appropriate for your course. In
this assignment you should outline the following aspects of
this enterprising work:
Outline of your enterprise idea
PESTEL could come in here, but maybe better to leave until later
assessments, with perhaps a brief mention here
Analyse a main competitor in your chosen market
Analyse the strengths, weaknesses, opportunities and threats
of your idea
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PESTEL in I & E – assessment 2
• You should present the main aspects of your
enterprise idea, drawing on elements of the
analysis that you have currently undertaken
and discuss your plans for the remainder of
the assignment.
• PESTEL could well be a part of the
“elements of the analysis”
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PESTEL in I & E – assessment 3
• Critically evaluate the innovation involved in your idea
PESTEL could come in here
• Analyse the environmental factors driving innovation in
your chosen market
PESTEL must surely come in here
Nota bene – probably take “environmental factors” to align with
slide 2 above
ie not just “ecology”
• Analyse the competitive forces in your chosen market
• Assess the risks associated with your idea
• Discuss any ethical issues
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Summary and reminders
• Summary:
– We have had a very interesting and useful look
at PESTEL analysis
– Could consider it for use in your future career,
your everyday life and PIPE
– It would probably be folly not to use it in I&E
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Summary and reminders
• Reminders:
– Not only is I&E very interesting, it’s also very
important, eg:
• 64% of directors said recent graduates’ employability skills
were more important to their organisation as an employer than
the specific occupational, technical or academic
knowledge/skills associated with the graduate’s degree”
(Prospects 2010, cf. HEA 2006)
– Assessment 1 deadline is imminent
– Tempus fugit!
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References
• CIPD (2008) PESTLE analysis.
http://www.cipd.co.uk/subjects/corpstrtgy/general/
pestle-analysis.htm [accessed 11/2/10]
• HEA (2006). Personal development planning and
employability. Higher Education Academy, York.
• Prospects (2010). What do employers want?
http://www.prospects.ac.uk/cms/ShowPage/Home
_page/What_do_graduates_do_/What_do_employ
ers_want_/p!efeeekL [accessed 9/2/10]
• Sandberg D (2010) Personal communication
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