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What is a pestle or pest analysis?

A pestle analysis is helpful in identifying the factors that may cause changes in your business market. You can also use this tool to analyze the market. It will help you make marketing plans accordingly. A company considers six factors while doing a Pestle analysis:


Having a fair idea of the political factors of a country is important in operating smoothly. It helps in identifying how a government’s actions and rules may influence an economy. Will the government rules and policies affect the business in any way? These are the points you can consider in political factor.

Politics may affect the operations as well. The personal interest of the employees may also influence the functioning of an organization. Hence, you must give a thought to all of it while writing the P of the Pest analysis.


Next, comes E, it stands for economics. Here, you have to take the same approach of analyzing the internal and external economic environments. You have to analyze a company’s project viability while assessing the internal factors. It can also give you an idea of the internal soundness of the project. You can use financial models and accounting techniques for the same purpose.

You focus on interstate taxes, embargoes, and interest rates while considering the external events. Look at the economic growth, inflation, minimum wage, working hours and financing availability, etc. Covering all these aspects make your economic element of pestle analysis complete.

Sociological Factor

This aspect of pestle analysis identifies the events that affect a market and community. You have to assess types of products that are in demand in the area you operate. Also consider the advantages and issues people face in the area of your operations.

For that, you need to analyze the cultural expectations, norms, and the population dynamics of the area. Furthermore, you need to know the health consciousness, career attitudes and preferences.

Technological Factor

Technology is another factor that you have to consider while doing a pestle analysis. Technology gets outdated in a short span of time. Doing this analysis helps you in using the right technology as per the market demands. You may make financial decision on the use of technology easily after giving a thought to it.


Next, comes L in the Pestle analysis. It stands for legal factors. You should analyze legal factors keeping both internal and external matters of a company in mind. Some laws may affect your business in the country of your operation. You should also maintain policies for your organization.

A legal analysis helps you in giving a thought to both these angles. As a result, you can come up with the legal strategies to address both these legal aspects. The main legal aspects you look in this analysis are the employment, taxation, imports, and export.


You must have awareness of the environment where your business operates. This E of the pestle analysis helps you to know the environmental aspects that may affect your business. These aspects can be natural, social and economic in nature.

Area temperature, monsoons, natural calamities come into the natural category. Travel access and ground conditions fall into the socio-economic factors category. Near water source and ground continuation are also the parts of it.
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