PESTEL Analysis

It is a Macro Environment diagnostic toolfor organizations. Its origins can be traced in the essay published in 1968 by Liam Fahey and V. K. Narayanan called "Macro- Environmental Analysis in Strategic Management", and it has evolved to this day by adding letters in the acronym that gives it its name.


To address it, let's start by differentiating it from the SWOT Analysis. The difference is given by its research object, while the SWOT looks for Strengths, Weaknesses, Opportunities and Threats in a particular organization by weighing its external and internal factors, the PESTEL Analysis focuses on the evaluation of external factors we can find in the context and / or market and its capabilities to condition organizational strategy. That is why it is important to follow the order from general to particular, first carrying out the PESTEL (general context of the organizations) and then the SWOT (a particular organization). 


Among the many advantages and benefits of PESTEL Analysis we can mention the following:


Optimizes decision-making processes by providing key information about the environment, which in turn are inputs for strategic planning.


Facilitates risk assessment, for example when developing an innovation or entering a new context or market.


Increases organizational adaptability, since it generates information on changes and trends for each sector.


Flexibility and dynamism, it is not a photo or a rigid analysis but it is built as a dynamic matrix of interrelated data. 


5 Components of the Pestel Analysis:


Political: brings together government factors that can affect the performance of organizations.


Economic: a group of macroeconomic factors, which are usually derived from political factors, has an impact on organizations.


Social: it involves all those socio-cultural, demographic, educational factors, lifestyle, consumption habits, religious beliefs, etc., that can have an impact on the strategy and management of organizations.


Technological: effects on the organization related to the development of new technologies, innovations, disruptive advances, etc., generated by the public and private R&D sector.


Ecological: it runs across the ecological awareness of public opinion, environmental legislation, effects of global climate change, natural disasters and regulations arising from these factors.


Legal: it is necessary to include all piece of legislation, whether it is in the making of, in treatment or in force in a country, community, region, etc.,where the organization has activities.


In Communications, the PESTEL Analysis is key to design our Corporate Communication Strategy since this is always the translation of the organization's strategy in communication terms. Any change in the components of this dynamic matrix has a potential impact on the reputation of the company and should be taken into account permanently.  

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