Pestel Analysis

Topics: Analytic Hierarchy Process, Factor analysis, Pairwise comparison Pages: 71 (7079 words) Published: January 15, 2013
International Journal of Business and Management; Vol. 7, No. 24; 2012 ISSN 1833-3850
E-ISSN 1833-8119
Published by Canadian Center of Science and Education

Developing a Multi-Criteria Decision Making Model for PESTEL Analysis
İhsan Yüksel1

Department of Business Management , Kırıkkale University, Kırıkkale, Turkey

Correspondence: İhsan Yüksel, Department of Business Management, Kırıkkale University, 7140 Kırıkkale, Turkey. Tel: 90-318-3573860. E-mail:
Received: August 26, 2012

Accepted: October 12, 2012

Online Published: November 21, 2012


Although the conceptual structure and nature of PESTEL (Political, Economic, Socio-cultural, Technological, Environment and Legal) analysis requires an integrated approach to analysis, the technical framework of PESTEL does not adequately support such an approach. PESTEL analysis, as it stands, mainly provides a general idea about the macro environmental conditions and situation of a company. This study presents a model to address problems encountered in the measurement and evaluation process of PESTEL analysis. The integrated structure of PESTEL factors and sub-factors were modeled by AHP (Analytic Hierarchy Process) and ANP (Analytic Network Process) techniques. Relationships between PESTEL factors were determined by DEMATEL (Decision Making Trial and Evaluation Laboratory). Global weights of the sub-factors were calculated using ANP. The PESTEL analysis model proposed in the study could determine the extent to which the macro environment of a company provides suitable conditions to achieve the aims of the company. Keywords: strategic management; macro environmental analysis, PESTEL analysis, ANP, DEMATEL 1. Introduction

Globalization and technological advancements have increased the potential for interaction among people living in different geographic locations. Within this process of change, national boundaries lose their relative importance in terms of everyday economic activities. Today, the importance and value of goods and services produced outside national political geographies have increased. As a result, the concept of international competition has become increasingly important (Eren, 2002). This process of change rapidly differentiates the structure of the continually broadening and changing environment in which companies conduct their activities. A macro environmental factor that was historically less important to achieving the goals of a company might therefore become increasingly important today. For example, new phenomena and concepts such as environmental protection, environmental health, transparency, and accountability have become important parameters that need to be taken into account in commercial activities. In its broadest sense, change affects the structure, decision-making, business methods, and actions of companies. Today, it is not possible for a company to survive in the long term without considering this dynamic process. A company has no chance to make a mistake and also to carry out activities by chance in an expanding and highly unstable environment. As a result, while carrying out its operations, a company must increasingly take into account the environment within which it operate. To meet such needs, company decision-makers should adopt a strategic approach to the management of macro environmental events, occurrences, and operations.

Strategic analysis, is the first of the basic stages of strategic management, and involves the analysis of current factors relevant to the environmental within which the company carries out its operations (Ülgen & Mirze, 2007). In general terms, the concept of environment involves far, near and internal environments, including all types of factors related to the activities of the company. In terms of the company, this comprises both internal and external environments. The internal environment...

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