CREATING A STRATEGIC BUSINESS PLAN USING PESTLE ANALYSIS

An Academic presentation by

Dr. Nancy Agnes, Head, Technical Operations, Tutors India Groupwww.tutorsindia.com

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Introduction

Conducting a PESTLE Analysis Political

Economic Social Technological Legal Environmental Conclusion

OUTLINE

Today's Discussion

A key management approach that is effectively being used within most modern organizations is Strategic Planning.

It has continuously enjoyed top rankings amongst five of the most popular approaches that have been adopted by managements across the globe .

INTRODUCTION

Typically, it has been considered as an approach adopted to formulate strategy, strategic planning comprises of components such as; a) evaluation of the mandate of the organization, values and mission, b) analyzing an organization’s internal and external environment, and c) identifying strategic issues on the basis of such analysis and developing strategies, plans and goals to tackle any issues .

When an organization is keen to realize a preset goal, it is expected to formulate an effective strategy to achieve it.

The strategy has to be such that it establishes priorities, fixes a time duration, allocates resources, formulate mechanisms for control, allocate human resources and it also needs to comprise of guidelines as to the manner in which every aspect will be tackled to realize a particular goal in the most appropriate manner.

Though the organization might be very reputed, would be having a skilled and committed team, the question here would be whether any strategies formulated might be of use or not? It’s quite simple, all the organization needs to do is conduct a PESTLE analysis

CONDUCTING A PESTLE ANALYSIS

For those who are clueless, a PESTLE analysis essentially would refer to executing an audit of an organization’s environment which facilitates the process of planning and helps in arriving at strategic decisions.

It is understood that in case an organization is in a position to audit their present environment and evaluate probable changes, they will be in a better position than their competitors to respond to changes .

The analysis would generally determine the most probable events that might have an impact on the organization.

Each of the factors from PESTLE – Political, Economic, Social, Technological, Legal, Environment would have an impact on the business plan.

This factor would present the manner and level to which the political environment of a region would impact the economy and some organization.

This might be at the local, state or national level.

Existing considerations within the market that might influence the organization would comprise of factors such as; probable change in government, instability in the government owing to the balance of power, altering policies of business and superannuation, laws pertaining to tax, labour related laws and trade limitations.

POLITICAL

This factor would pertain to aspects that are distinct to the economy and have a direct impact on the organization.

Factors that could influence the strategic plan of an organization would comprise of rate of interest, rate of exchange, rate of inflation, prices of property and economic growth as well.

Economic aspects would also refer to economic factors of the organization’s geographic area.

ECONOMIC

This factor essentially comprises of demographic factors which would be inclusive of rate of growth of population, gender and age distribution of population, cultural facets and changes in social behaviours.

For instance; lately social media is being extensively utilized to discuss about products and services.

Several of these aspects might make an impact on the manner in which organizations conduct their businesses with their customers and the techniques used for interacting with them.

SOCIAL

The technological factor would refer to the rapid changes that occur in the domain of technology, technological research and development initiatives and automation.

Such factors are instrumental in driving decisions for outsourcing, efficiency and quality considerations.

For example; use of smart phones, artificial intelligence, emergence of location based searching, skype meetings or mobile internet for that matter.

Over the period of the past three decades, the massive changes that have occurred in the domain of technology has hugely impacted all industry sectors and the speed and level that this will occur only stands to show an upward trend.

TECHNOLOGICAL

Legal factors would pertain to every law that is directly linked with the organization and their domain of activity.

For instance; laws on privacy, consumer protection laws, employment laws and laws against discrimination could certainly influence some aspects of an organization.

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LEGAL

The environmental factor draws reference to every factor that is directly linked with, determined or influenced on the basis of the natural environment where the organization

is located.

This would comprise of weather and natural disasters, climate changes, geographical position and sustainability.

For instance; if the location where the organization is situated is subject to extreme weather conditions, it would definitely make a negative impact on the organization.

ENVIRONMENTAL

All the above said factors are intricately associated with the business and it would do well for an organization to carry out an PESTLE analysis.

The analysis will help them to understand their external environment and then they can formulate strategies to tackle them while creating their strategic plan.

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CONCLUSION

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