External Analysis: PESTEL Framework | Strategic Management

As we know, a firm’s operation and performance is inevitably influenced by its external environment. When mangers decide to start a new business or enter a new market, they should coherently evaluate firm’s external environmental factors. A PESTEL analysis is a framework or tool used by managers to analyze and monitor the macro-environmental factors that have an impact on an organization, company, or industry.

PESTEL is an acronym that stand for Political, Economic, Social, Technological, Environmental and Legal factors. Generally, the PESTEL analysis focus on a big-picture and long-term changes of firms ‘external environment. So let us take a close look at each individual element in the PESTEL analysis.