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5 common mistakes in doing a PESTLE analysis

The PEST or PESTLE analysis is one of the most common diagnostic tools used in marketing and business planning. Its six basic perspectives provide a framework for understanding external factors which may impact the organization, which is easy to follow and yet the tool is so often misunderstood.

PESTLE - Political, Economic, Sociological, Ecological, Legal, Environmental.

PESTLE provides the external perspective to a SWOT analysis…

where: PESTLE + PRIMO-F = SWOT

Six simple rules for a successful PESTLE analysis

1. Be realistic about what is happening in each of the six areas
2. The Analysis should identify what is happening in the marketplace today, and where it could be in the future.
3. Be specific. Avoid grey areas
4. Always analyse in relation to your competition i.e. better than or worse than your competition
5. Keep your PESTLE analysis short and simple to understand – but only as short and simple as the application or situation demands – it is about ‘fitness for purpose’
6. Avoid unnecessary complexity and over analysis

The Top 5 mistakes people make:

1. An unclear goal – providing the context for the PESTLE analysis
2. Maintaining too narrow a focus – you need to look broadly at the market
3. Neglecting input from others – inside and outside the organization
4. Performing an analysis only once- this needs to happen on a regular basis (monthly for technology firms – quarterly for many others)
5. Reliance on PESTLE as a holistic diagnostic strategy – it is only one tool.

A concise PESTLE Analysis

Keep your PESTLE analysis short and focused. If it becomes too long-winded, you’ll soon forget some of the more important points and it will become less effective in the long term.

 

Conclusion

The PESTLE is a valuable tool that in the right hands and with the appropriate level of effort can provide a valuable insight into current and future strategy.

Remember to consider the results of the PESTLE analysis as just one tool in a variety of analysis methods that can form together to create a more realistic analysis of your organization

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RapidBI is an organizational effectiveness consultancy based in the UK but working internationally.
© RapidBI & Mike Morrison 2011 - this article/ page is free to copy and use on the condition that an active link back and reference is made to this site and page. Thank you for your understanding and co-operation.

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