MARKETING

Understanding PESTEL Analysis with Examples

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PESTEL analysis is among the most popular analytical tools as far as strategic business planning is concerned. The business model can effectively be used to notify professionals about a product, organization, individual and what position it holds in the market. In this guide, we’ll walk you through a detailed guide about what PESTEL analysis is all about.

What is PESTEL analysis?

PESTEL analysis is an outline or tool used by marketers to monitor and analyze external factors (also known as environmental factors) that are likely to impact an organization. This helps identify threats and weaknesses which are later used in SWOT analysis.

What does PESTEL Stand for?

PESTEL is the acronym for political, economic, social, technological, environmental and legal factors. Since it’s an acronym, it can also be termed as PESTLE.

How to do a PESTEL Analysis

If you wish to conduct a PESTEL analysis, you ought to start off by deciding what idea, organization or product you’d like to analyze. If it’s a business, you’ll need to examine all of its different components to identify important external factors. These factors must play a vital role in how the business operates and performs. PESTEL analysis is completed once you have categorized all of these factors.

PESTEL Analysis Examples You Need to Know

To help you gain a clearer idea, we’ll be discussing a few examples of PESTEL analysis:

PESTEL Analysis of PepsiCo

PepsiCo is undisputedly the largest selling beverage brand in the world. With celebrity endorsements from some of the biggest names including Britney Spears, David Beckham and so on, Pepsi caters to an incredibly diverse market with customers spread across the world.  PepsiCo’s PESTEL analysis is as follows:

  • Political: The political scenario around the world largely impacts policies associated with PepsiCo. For instance, political unrest can result in inflation, causing product sales to fall.
  • Economic: Economic conditions play the most important role in influencing a business. For instance, the economic downturn in 2008 favored the brand, increasing beverage sales.
  • Social: Spread across the world, Pepsi has to communicate a global image that people can associate with. Social implications must be taken into account while coming up with marketing campaigns across different countries.
  • Technological: Technology has done wonders in integrating the world together. Not to mention, the social media boom has brought brands and consumers together. Because of this, Pepsi needs to stay ahead of technology trends to increase brand engagement.
  • Legal: Beverage companies can be made a part of numerous legal allegations. Factors such as product testing and quality assurance should be kept in mind to prevent legal matters.
  • Environmental: While environmental factors are important, it may not immensely alter Pepsi’s trade because of its industry.

PESTEL Analysis of Starbucks

You’re probably no stranger to this giant coffeehouse chain. Over the years, Starbucks has garnered a lot of attention for its robust business model, its PESTEL analysis is as follows:

  • Political: Political factors such as tax policies and employment law greatly influences Starbucks. To ensure fair trade practices, the brand must adhere to environmental and social laws. For this reason, the company relies on the political stability of its country.
  • Economic: The Economic recession is a prime external factor that should be taken into account. Other important factors include currency exchange rates and economic environment of different markets.
  • Social: Because the baby boomer generation is heading towards retirement, Starbucks is expected to lose consumers. Here, Starbucks will have to focus on reaching out to a wider target audience that includes Millennials and Gen X.
  • Technological: Over the years, Starbucks has cleverly used technology to boost sales. The company has already introduced Wi-Fi capabilities across its outlets around the world. Starbucks has also been testing with mobile payments to improve customer satisfaction.
  • Environmental: Starbucks must take several environmental factors into account as to not harm the sentiments of their consumers. For this reason, the company often reaches out to international advocacy groups and activists.
  • Legal: To build consumer trust and avoid legal implications, the coffeehouse giant must ensure it does not violate legal rules and regulations in home markets. Starbucks must also ensure that its policies are inclined with health authorities.

So far, Starbucks has managed to keep all these factors in mind to create a stable environment for itself in the world of business.

Conclusion

Hopefully, this guide has provided you a clear outlook of PESTEL analysis. Use these pointers to incorporate PESTEL analysis in your business. Good luck!