To maximize the benefit of the PESTLE Analysis it should be used on a regular basis within an organization to enable the identification of any trends. The impact of a certain external factor may have more severe consequences for a particular division or department and the PESTLE technique can help clarify why change is needed and identify potential options.
As with all techniques there are advantages and disadvantages to using it to help plan organizational strategy.
- Provides a simple and easy-to-use framework for your analysis.
- Involves cross-functional skills and expertise.
- Helps to reduce the impact and effects of potential threats to your organization.
- Aids and encourages the development of strategic thinking within your organization.
- Provides a mechanism that enables your organization to identify and exploit new opportunities.
- Enables you to assess implications of entering new markets both nationally and globally.
- Users can oversimplify the information that is used for making decisions.
- The process has to be conducted regularly to be effective and often organizations do not make this investment.
- Users must not succumb to 'paralysis by analysis' where they gather too much information and forget that the objective of this tool is the identification of issues so that action can be taken.
- Organizations often restrict who is involved due to time and cost considerations. This limits the technique's effectiveness as a key perspective may be missing from the discussions.
- Users' access to quality external information is often restricted because of the cost and time needed to collate it.
- Assumptions often form the basis for most of the data used, making any decision made based on such data subjective.
This analysis technique should be used in conjunction with other tools such as a SWOT and other strategy tools.
The objective of using the PESTLE Analysis is to ensure that you have identified the important implications for your organization and that nothing key has been overlooked.
You may also be interested in: Introduction to PESTLE Analysis, PESTLE Factors, Political Factors, Economic Factors, Social Factors, Technological Factors, Legal Factors, Environmental Factors and Advantages and Disadvantages.