Planning through Performancesm Brief
Key Points: The PESTEL analysis is a framework for assessing the general or macro environment in which an organization operates. Each dimension of the framework—Political, Economic, Social-Demographic, Technological, Environmental and Legal-Regulatory—is designed to provide insight into specific issues affecting organizational performance. To maintain its usefulness as an analytical tool, the PESTEL analysis should be updated and reviewed regularly by senior managers. Main Thoughts: One of the basic concepts of business strategy is that organizations operate within an external environment. This environment is complex and constantly changing— sometimes with unfavorable effects on organizational performance. In order to survive within this changing environment, organizations must find a way to fit themselves successfully into it. A means of helping maintain a good fit is by assessing key variables or dimensions of the environment and then adapting the organization to those dimensions. The PESTEL analysis is a general analytical tool for helping with this process. The PESTEL analysis is a framework for assessing this general or macro environment in which an organization operates. It consists of six key dimensions within which external environmental conditions can be assessed. Political: Pertains to the interests, actions, laws or regulations of interest groups and political entities who’s actions impact the operations of organizations. The activities of lobbyist groups such as in the defense sector would be reviewed here. Economic: Refers to the economy and prevailing economic conditions that affect organizations. The restrictions placed on lending that have occurred during the recent recession are examples of economic factors that affect organizations. Social-Demographic: Pertains to tastes, preferences and attitudes of a population, as well as its demographic factors such as population size, population...
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