The environment: PESTEL analysis
The macro-environment and the micro-environment, the six dimensions of PESTEL, and reading the same factor as an opportunity or a threat depending on the organisation.
- 23 cards
- 5 topics
- Free
The outline, topic by topic
Each topic is weighted the way the exam weighs it.
- Concepts
- Questions
- Sort and link
- Scenarios
- Understand
A few cards from the deck
Macro-environment: what is it?
Show the answer
The set of general forces (political, economic, social, technical, ecological, legal) that bear on every organisation in a sector.
No organisation can change them on its own. It endures them or adapts to them, hence the need to watch them.
A competitor cuts its prices by 10%. Is this information part of a PESTEL analysis?
- No: it is the micro-environment
- Yes: it is an economic factor, to be filed under the letter E
- Yes: it is a political factor, as it affects the whole market
- Yes, but only if the competitor is a large listed company
Show the answer
No: it is the micro-environment
The economic factor in PESTEL is general (interest rates, inflation, purchasing power). A specific competitor's price is a micro-environment player, analysed with the five forces.
In PESTEL, P is …, E …, S …, T …, E … and L ….
Show the answer
In PESTEL, P is political, E economic, S sociocultural, T technological, E ecological and L legal.
The two "E"s are told apart by their place: the first is economic, the second ecological. Some versions write PESTLE, in another order.
Micro-environment: what is it?
Show the answer
The players in direct contact with the organisation: its customers, suppliers and competitors.
The organisation can act on them, negotiate, compete. This is the ground of Porter's five forces, not of PESTEL.
A young meal-delivery company runs a market study: it lists its competitors, its partner restaurants and its freelance couriers, then says it has done a PESTEL. What is its mistake?
- It did not put its objectives in figures with the SMART method
- It forgot to sort its factors into strengths and weaknesses
- It forgot to place each player by power and interest
- It described its micro-environment, not the macro one
Show the answer
It described its micro-environment, not the macro one
Competitors, suppliers and customers make up the micro-environment. A PESTEL looks at couriers' labour law, interest rates, consumption habits and so on. Strengths and weaknesses belong to SWOT, and the power-interest grid is for a project's stakeholders, not the macro-environment.