PESTLE Analysis

Project -----

Capacity Development PUSDIKLAT in IWRM Education and Training

2

Layers of the business environment

ContentWhat is PESTLE analysis?What does PESTLE analysis include?Case study on PUSDIKLAT-PU Strategic

Plan Development.

Learning objectivesAfter this lecture participants will be able

to identify and undertake PESTLE analysis

PESTLE analysis

PESTLE is an analytical tool which considers external factors and helps you to think about their impacts 

PESTLE analysisIs a useful tool for understanding the “big

picture” of the environment in which you are operating

By understanding your environment, you can take advantage of the opportunities and minimize the threats.

This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves.

This analysis that makes strategic plan differ from conventional plan.

The factors in PESTLE analysisP – Political

The current and potential influences from political pressures

E - Economic The local, national and world economic impact

S - Sociological The ways in which changes in society affect the project

T - Technological How new and emerging technology affects our project /

organization

L - Legal How local, national and global legislation affects the project

E - Environmental Local, national and global environmental issues

PESTLE vs. SWOTIn contrast to a SWOT, PESTLE

encourages you to think about the wider environment and what might be happening now and in the future which will either benefit or be of disadvantage to the organization, individual etc

– a kind of radar which picks up trends and developments in the external environment which can be used to inform longer term planning and strategy making

PESTLEPolitical: Influence of central government policies that control the DIKLAT business; Local government policies on the HRD; Local political practice environment; Public infrastructure and construction policy ?????? ??????

Economic: Construction labor minimum wages Regional income (PADS) National budget expenditure (APBN) in the regional / local government Impact of public infrastructure development in the local economy Changes in the private investors environment. ???? ????

PESTLEPolitical examples: Decentralization and its application on special fund allocation (DAK) for

Regional HRD Implementation of Bureaucracy Reform Regulation and de-regulation trends Interest of Local Government and Local People Representative Assembly

(DPRD) on human resources development. Frequent changes in PW’s local government positions due to rapid changes

in politically elected authorities within the government affecting instability of public works positions.

Possibilities for electing “the right man in the right place” in the context of regional officials in related to public works positions.

Direct international agreements for regional human resources development

Economic examples: Unemployment and supply of labor Labor minimum wages and costs Level of regional income (PADS) Likely impact of public infrastructure development in the local economy Likely changes in the private investors environment. The implication of MP3EI corridor.

PESTLESociological:

Population growth and distribution, Organizational culture, attitudes to work, management style, staff

attitudes Education, employment opportunities and occupations Ethical issues and culture diversity Demographics: age, gender, administration area size Low civil effect after training and education in PUSDIKLAT-PU Low consumer satisfaction and confidence and its affect on aggregate

demand

Technological: Information technology, internet, global and local communications Computer aided technology access, licensing, patents, research and

development, intellectual property issues, Public works technology development such as water MD, bridge, road,

housing, Transportation, energy associated/dependent technologies, waste removal/ recycling, etc.

PESTLELegal:

Current local legislation, future legislation due to RB regulatory bodies and processes environmental regulations, employment law, consumer protection industry-specific regulations, competitive regulations

Environmental: environmental issues, environmental regulations customer values, market values, stakeholder / investor values management style, staff attitudes, organizational culture, staff

engagement

PESTLE analysis and projectsIt is possible to use the PESTLE analysis on

projects as well for organizationsIt is not always needed, especially if the

projects/ organization are smallIf PESTLE analysis is used for a

project/organization, then the focus should be on solving the “focal problem” and analyze how the external environment is affecting the process of solving the “focal problem”

Issues of concern The main problem with these external PESTLE

factors is that they are continuously changing

Therefore PESTLE analysis should include a thorough analysis of what is affecting the organization or a project Now, and what is likely to affect it in the Future

The result of a PESTLE analysis is usually a list of positive and negative factors that are likely to affect a organization/projectHowever, by themselves, theses factors mean very little It is important to bear in mind, that PESTLE analysis

requires careful Application of results

Similar analysisOther forms of PEST - PESTLE, PESTLIED, STEEPLE

and SLEPT:Some people prefer to use different flavors of PEST analysis, using other factors for different situations. The variants are:

PESTLE/PESTEL: Political, Economic, Sociological, Technological, Legal, Environmental;

PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic;

STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical; and

SLEPT: Social, Legal, Economic, Political, Technological

PESTLE Analysis

Following is a case study of PESTLE analysis on Training and Education

(DIKLAT) Development and Implementation

PESTLE

Political factorsImpactsPositive >Neutral =Negative <

• The decentralization law to the local government• Low political pressure from The local Government to the Local People Representative Assembly/LPRA (DPRD)• Low interest among politicians in LPRA• High interest among local governments to improve the situation but less financial resources• Frequent changes in PW’s local government positions due to rapid changes in politically elected authorities within the government affecting instability of public works positions• Possibilities for electing “the right man in the right place” in the context of regional officials in related to public works positions.

• Direct international agreements for regional human resources development.

• Local regulation and de-regulation trends.

PESTLE

Economical factors - PHLImpactsPositive >Neutral =Negative <

• Low regional minimum incomes (UMR) and availability of capital to invest in public infrastructure• Low purchasing power among a large group of customers in the domestic market• Limited knowledge in financial mobilization affects interest in regional HR development • The ongoing political power environment affects governmental and investor expenditures and decreases the possible funding of development in human resources sector.

Sociological factors - PHLImportancePositive >Neutral =Negative <

• Acceptance of fully competence for important government positions

• Lack of awareness in requirement of highly competence officers

• Vague career path in the governmental offices

• The ethnical attitude of government employee for gaining positions

• Lack of specialized education among the officers

• Religious and ethnic sentiments affecting positioning practices

.

PESTLE

Technological factors - PHLImportancePositive >Neutral =Negative <

• Lack of infrastructure (e.g. facility, machinery, tools, practices)• Insufficient availability of the operator for technical facilities • Lack of technological improvements and development (e.g. water, housing, bridge, road, technology etc.)• Lack of access for new engineering technology

• Inadequate computerized facilities such as internal digital library, networking virtual world library etc.

PESTLE

Legal factors - PHLImportancePositive >Neutral =Negative <

• Lack of formal regulations, monitoring and enforcement on:– Management quality standards and its auditing– Operational standard procedures– Minimum service standards– Individual performance standards– Competences Standards, etc.

• Lack of access to regulations in foreign financial assistance markets (e.g. EU, USA and Japan)• No sovereign guarantee for local government foreign loans from the central government.

PESTLE

Environmental factors - PHLImportancePositive >Neutral =Negative <

• Insufficient availability and access of clean water

• Continues water resources environment degradation

• Continues heavily pollution in river basin water

• Lack of adequate environment management awareness

• Lack of early environment education

• Lack of environment public awareness

• No strong guardian institution for environmental public violation

• Weak law reinforcement for environmental public violation.

• Acquiescence for environmental public violation.

PESTLE

ReferencesRenewal Associates (2003). PESTEL Analysis.

Downloaded 18. mars 2007 from: www.renwal.eu.com

Rapidbi (2007). The PESTLE Analysis Tool and Template. Downloaded the 2nd of June 2007 from: http://www.rapidbi.com/created/the-PESTLE-analysis-tool.html

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