Video Transcript: PESTEL Analysis

Hello everyone, and welcome to Mr. Simplifies Tutorials. In this video, we are  going to look at PESTEL analysis, which is an important management  framework. Now, what is this management framework used for? What is  PESTEL analysis used for? And obviously, PESTEL P, E, S, T, L, E stands for  something which we are going to look at, and it actually is a tool, a framework  used to analyze the external factors affecting various projects, brands or  businesses overall. Now it's important to understand that various internal and  external factors can affect the functioning of a current project that you have  undertaken, or a brand on the whole or your your entire business. And a lot of  these internal and external factors change all the time, and it's important to stay  on top of understanding these factors and understanding how they influence  your business. Now, SWOT analysis is another management tool, another  framework used to understand the strengths, weaknesses, opportunities and  threats corresponding to a project or a business. And in terms of PESTEL  analysis, it links in quite well with SWOT analysis, because the opportunities and the threats part of it links in quite well with PESTEL analysis, because there are  factors which are external to the business which come into play there. We're  going to look at SWOT analysis in detail in another video. So don't worry if you  found that bit of explanation to be slightly confusing, as I just mentioned, the  factors that we study under PESTEL analysis are out of control for the business. They cannot be controlled by the business. These are external factors, like  regulations and law, and businesses can't control them. Governments control  them. So let's have a look at some of these factors and how these factors are  categorized. Now, what does PESTEL stand for? PESTEL stands for P for  political, E for economic, S for social, T for technological, L for legal and E for  environmental. Now these are like the categories in which these external issues  facing the business or the project are categorized under. So because there are  like six categories, most of these external factors that affect businesses or  projects will fall under any at least one of these categories, if not multiple  categories. And over the course of these this video, you will understand that in  most situations, a lot of these factors are interconnected, so a certain factor can  be political and technological or environmental at the same time, because it's  obvious to it's obvious to understand, easy to understand, that politicians set  laws. You know, whether it's economic, economical laws or legal regulations or  environmental laws. So it's all linked to one another, but it's important to classify  them and categorize them and understand how they impact your business. So if  we look at political factors to begin with, that stands for P for PESTEL, these  would be government tax policies, regulations, you know, if there's an increase  in in taxation, in in the in the city, in the gov, in the country overall, that would  affect the Business, obviously, business regulation policies, policies that affect  governing businesses. Government laws on competition in the marketplace. For  instance, if there is a sort of a monopoly in the in the marketplace that you're 

operating in and the government provides incentives to newer organizations and cuts down the incentives provided to regular organizations like yourself that can  have an effect on your business, and that can be classified under political  influencing factors. And now we look at economic now, for instance, if the  exchange rate has gone down, or basically your currency, your country's  currency, has devalued. In the global financial markets, that can be an economic factor affecting your organization, if you obviously import, export, etc, or procure  goods, yeah, from from overseas. Is the national GDP obviously has an impact  on absolutely everything to do with businesses and everyday life. And what if  there is a reduction or an increase in public spending power, that would  definitely have an effect. And these are, like the economical factors that can  affect your project or your business on the on the whole. What about social  factors now? Social Factors could be a basic change in styles or choices of the  population, something that's, that's, that's very much in in style, in fashion at the  moment. Can, can this be phased out in no time whatsoever, because consumer tastes change all the time, and that can impact your project or your organization  on the whole, changing the population demographics. Now, for instance, if your  target market, if you're the segment of the market in the in in your job,  geographical location of operation is a particular ethnic group, for instance, and  that ethnic group group has suddenly, you know, moved over to a different part  of the world, etc. You know, these sort of changes are social changes, and that  can affect your business, community groups and pressure groups. Now, there  can be various pressure groups and community groups that can, you know,  influence, that can voice their opinion against or for your organization, causing a change and becoming an influential factor in that way. So these are sort of like  the social factors. And what about technological factors? A certain rapid  technological progress, or, you know, sudden innovation in technology can  obviously have an impact, because if everybody's moved on, everybody has  adopted different technological ways of doing certain things, and you haven't,  then obviously you'd be left behind, or if you're way ahead of the block and  wasting or spending too much money on on technology, whereas you know  nobody else is and everybody else is looking for economical ways of doing  things, then obviously that's something that you'd be looking under, but that  would be categorized under technology. Now, improvement in production  technology, something very commonly experienced by manufacturing and, you  know, consumer goods companies, data storage and protection technologies,  something that affects most businesses. You know, once they're larger than, you know, a small, small scale. Or, you know, once they once they cross that small  to medium enterprise bracket, I would say legal factors. What can be legal  factors? These are like factors relating to wages or employment. These could be taxation changes, like company taxation policy changes. These could be just  changes in regulations relating to working practices in your industry in in 

particular. So various legal factors. Obviously, you could see that these, these  factors, tie in very well with the political factors that we saw to begin with. And  there is an evident link between all of these factors, environmental or ethical  factors, as they're called, sometimes, as well. Now these often relate to  corporate social responsibilities, environment factors. Now, obviously global  warming and sustainability are like very hot topics in the modern day for good  reason. Obviously, the environment needs to be protected. So your carbon  emissions, your carbon footprint, become very important factors. And then if  there are changes in environment regulations, some of these changes can affect you directly. So it's important to understand them, important to study them,  important to understand how they're affecting your project or your business. As  mentioned previously, there is a good link between PESTEL and SWOT. But  obviously, since I haven't covered SWOT analysis in this channel, yet I will do  that, and in the video that I produce about SWOT analysis, explaining what it is  and the various factors that we look at when we consider studying SWOT  analysis, we will look at the link between PESTEL and SWOT. Okay, hopefully  that was a good introduction to PESTEL analysis. And I hope you found this  video useful as as for the other you know, in line with the other videos in the  channel. And I hope you find all of them very useful. I wish to continue producing tutorial videos like these. If there are any topics of interest that you. Want me to  cover. Please let me know in the comment section. Thank you very much for  your attention. Thank you very much for visiting this video, if you visited this  channel for the first time, and please like this content. Please support this  channel and subscribe and spread the word. Thank you very much. Goodbye.  Bye.