Technique 2.77 Understanding the Operating Environment Around You ‐ PEST(LE) Analysis

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Introduction

Using the PESTLE analysis to identify potential sense of urgency(ies).This involves doing a scan of your environment under the headings of political, economic, sociological, technological, legal & environment (see table below)

Definition
Basis questions
Some issues/elements to consider
P =
political
What is the political situation of the country and how can it affect your industry? global/regional/national/local factors; national stability/security, type of government, government policies, personalities in positions of power, separation of power (politicians & judiciary)
E =
economic
What are the relevant economic factors? fiscal (tax) and monetary (interest-rate) policies; macro and micro indicators (economic growth, exchange rates, inflation rate, disposable income, home ownership, living standards, etc) wealth/income distribution, cost of inputs (materials, wage rates, etc), etc
social classes, living conditions and lifestyle.
S = sociological How importantly does culture impact in your industry and what are its determinants?
cultural & traditional aspects (social groupings, life styles, living conditions, etc), demographic (population growth rate, age/gender/ethnic/language/religious, etc differences & distribution, etc.), career attitudes, education levels, attitudes to technological change, ethical standards, social norms/behaviours, social responsibilities, etc
T = technological What technological innovations are likely to occur & impact your industry? research and development, automation levels, technology incentives, rate of technical change (especially disruptive one, eg digital & internet, etc), barriers to entry, creativity, innovation, impacts on efficiency & production (logistics, manufacturing, etc), etc
L =
legal
What are the current laws (rules & regulations, etc) that impact
 your industry and are there any proposed changes in these laws for your industry?
understanding legal framework (international/regional/national/local), eg rules & regulations; laws (discrimination, consumer, anti-trust, industrial relations, employment, health and safety, etc); independence of the judiciary
E = environmental What are the environmental concerns for your industry?  global to local issues, sustainability (renewables, etc), recycling waste, climate change (global warming, etc), pollution, resource degradation & depletion (flora, fauna, land, minerals, water, air, etc), consumerism, etc


NB The social, economic, political, technological, environmental, legal drivers of change are very powerful forces. Like swimming in the ocean, it is futile to swim against the strong currents as they will soon overwhelm and exhaust you. There are 2 options: you can float entirely at the mercy of currents and keep your head just above the water, ie go with the flow, or manoeuvre yourself into a favourable position that will allow you to swim back to shore with the help of the waves, ie find ways to handle the situation.

organisational development change management
(source: Alexander Osterwalder et al, 2010)

 

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