The PESTEL analysis aims to generate a list of generic factors that may cause any type of impacts on the company. Each letter of this model’s name represents a specific area one should take into account for this analysis, which are:
P- Political Factors (government policies, community policies etc.)
E- Economic Factors (economic situation, interest rate, discount rate, unemployment level, level of demand/supply etc.)
S- Social Factors (culture, values, lifestyle, demographics etc.)
T- Technological Factors (new production techniques, innovations, disruptive advances etc.)
E- Ecological/Environmental Forces (environment, solid waste, air pollution levels etc.)
L- Legal Factors (specific laws taking place, be aware of collateral damages etc.)
Many analysts come to the conclusion that a PEST analysis (without considering ecological and legal factors) is enough to characterize the generic environment. There is no doubt that the first 4 factors are essential to have a good idea of the Macro Environment, however we must always take into account even if only in thought the other 2 factors.
Exercise: Which are the Factors that may influence your company? You may answer this question on the following form if you wish.