TABLE OF CONTENTS There are six main factors which normally apply for the analysis of the external environment: political, economic, social, technological, legislative and environmental, and these are often referred to as a PESTLE analysis after their initial letters. Inevitably, there is always some overlap between them because, for example, political decisions are often based on economic factors and are implemented via the legislative process. The fact remains that the PESTLE analysis is a useful tool to examine the external environment affecting large and small organizations alike.
These tend to be issues which are generated at government (or increasingly at European Union) level, and which may have a direct impact on the day-to-day operation of the business. Some typical, recent examples might be the Statutory Minimum Wage, which guarantees a minimum hourly rate of pay for employees, or the Working Hours Directive. This was a politically motivated move which was imposed in the UK in 1998 on the grounds of health and safety to ensure that British workers could not work more than specified hours, and thus render their employers more competitive than their continental rivals! The end result is that a major administrative burden has been placed on businesses which now have to monitor the working hours and overtime of all staff on a rolling basis to ensure compliance with the Directive. Naturally, this places a disproportionate burden on smaller firms that are less likely to have the administrative capacity. Similarly, the political move towards a single...
