Speaker 1: Hey everybody, welcome back to another business analysis video. In today's video, we'll be exploring PESTLE analysis. P-E-S-T-L-E is an essential tool for every business analyst for analyzing the external environment. So let's dive into the video. So firstly, let's really understand what PESTLE analysis is about. What exactly is it? PESTLE analysis is a framework that we use to identify and analyze six key external factors that affect the organization. And these are the political, the economic, the social, the technological, the legal, and the environmental impacts on the organization. This tool is critical for understanding the broader context in which the business operates. Helping us as business analysts to make informed strategic decisions. So let's explore each factor in detail. Taking the first factor, which is the political factor. So when you think about political factors, what comes to mind? Politics, right? So this involves government policies, stability, and international relations. Um, for example, changes in trade policies, which can impact the global supply chain. The second factor is the economic factor, which includes aspects such as inflation, economic growth, exchange rates. These directly affected the business financial performances. Now the social factor looks at the society, societal trends, demographics, uh, cultural norms, shift in consumer behavior and preferences. All these various aspects fall into the social category. Now the technological factor, we look at IT things, right? This really focuses on the technological advancements, innovations, IT infrastructure, um, all these things that are crucial for staying competitive in today's digital age. There's so many new IT stuff, AI, all these things can impact the business or the organization. So these are external that the business or the organization cannot control. It's outside the control of the business. Now taking the legal factors, which generally encompasses laws, regulations, any legal issues that affect the operations of the business. Um, this could include labor laws, health and safety regulations, uh, and compliance requirements. This is that aspect of the legal external environmental impact on the organization. We have the environmental factors. When you think about the environment, things like the weather, this factor deals with ecological aspects, such as the climate change, um, environmental regulates regulations and sustainability practices, which are increasingly vital in today's world, really. So that covers what PESTEL is and what really it is that we are analyzing as business analysts. When we are doing PESTEL analysis, the external things outside the organization that the organization cannot control. We need to consider these, you know, that for the organization to be successful. When exactly do we use PESTEL analysis as one of the tools, um, that we employ as business analysts? Yeah. So I'm going to give you some scenarios where we will typically need to perform PESTEL analysis. Now, the first scenario is the strategic business planning during strategic business planning. When the organization is formulating long-term strategic plans, the business analysts will use PESTEL analysis to understand the external factors that could impact the business's future direction. It really is crucial for setting realistic objectives, uh, and developing strategies that are resilient to external changes. Another scenario is when the organization is entering new markets. Before entering a new geographic markets, um, or before launching a new products, organization needs to really understand what are the external factors. This is where the business analysts will perform PESTEL analysis to evaluate the viability and the potential challenges in that new environment that the organization is looking at moving into. This really, really help in understanding the local regulations, any cultural nuances, um, economic conditions and other factors that could influence the success of the business when it moves into a new market or creates a new product. A third scenario is during change management. When an organization is undergoing significant changes, an example could be mergers and acquisitions, right? Or, um, restructuring its business. So business analysts will use PESTEL analysis to anticipate the impact of these changes on the different aspects of the business and plan accordingly. So in M&A project, which is the mergers and acquisitions, the PESTEL analysis helps really in evaluating that broader external environment on the target company, including any regulatory implications, any market conditions, as well as cultural fits. Another scenario where we adopt PESTEL analysis is during digital transformation projects. Projects that involve significant technological changes or digitalization. A business analyst will use PESTEL analysis to access, to assess the technological landscape. And this will include trends, legal considerations, uh, anything that is related to digital data as well as cyber, um, security. The fifth scenario is during risk management. We use it to identify and mitigate any external risks. Um, a PESTEL analysis will really provide us with a comprehensive view of potential risks that will arise from PESTEL, the political, the economic, the social, the technological, the legal, and the environmental factors. This is really vital for us to develop a sort of robust risk management strategy for the organization. Now, another scenario is during the feasibility studies. As business analysts, we do feasibility studies on projects, um, for new project initiatives. So this is where we will adopt PESTEL analysis to analyze the feasibility and any potential impact of the project in the context of current and future external conditions, really. Now, another scenario, the seventh one is competitive analysis. When you are looking at your competition for the organization, we use it to understand the landscape in which the business operates. We will use it as part of that broader competitive analysis so that we can sort of identify opportunities and threats in the business environment. So when doing, um, that external environmental analysis, we first have to look at an internal, what are we doing currently? What are our strengths and weaknesses? And when it comes to the external environmental factor, what are the opportunities available to us and who are the threats in regards to the competition that exists? So this is how we use the tool, a very, very interesting tool for business analysts to adopt, um, for success, really. Uh, so let's now apply PESTEL analysis to a case study. Let's take a post office, for instance. Let's explore specific examples under each category so that we understand how these external factors can impact, um, such an organization as the post office. Let's first take the political factors that can impact the post office. This could include your government policies on the funding of the postal service, um, or any cuts that can significantly impact operations of the postal service. It could also include things like regulations, uh, regarding international shipping, for instance, uh, and mail security, which can really dictate the post office scope of services. Another example is political stability, especially in countries with, um, sort of volatile political climates. It can affect the reliability and continuity of postal services. So those are political factors that could impact the postal, the postal services, right? The post office. Now, what are some economic factors that can affect the post office? Um, when we talk about economic, economic downturns that can lead to reduced business and personal mail, it can affect revenue for, for the business. Fluctuations in fuel prices as well can significantly impact the cost of the transportation, the mail transportation, especially for a national carrier for, for the post office. Another impact is rise of e-commerce. It can also boost the package delivery services, um, thereby altering the revenue, uh, model from a traditional mail to, to parcel delivery. So an example for social factor that can impact the post office is changes in consumer behavior, such as preference for digital communication over traditional mail, so you can see that this can start to decrease the mail volume. Another example is the demographic changes such as urbanization. This can influence the location and the demand for post office services depending on the location and the demand for the services that the post office offers. Now, another key one is social trends to, towards environmental, um, friendly practices. It can push the post office towards adopting sort of greener operations, for instance. Yeah. So that's it for economical factors. Now let's look at the technological factors that can impact the post office. This is a very interesting one. So examples could be advancements in digital technology, which can reduce the demand for traditional mail services. Another one is innovations in logistics and as well as automation, which can improve the efficiency in sorting and delivery process. There's a lot of manual work around post offices. So creating some sort of efficiency through technological means will help. Another one is the growth of online platforms and apps for postal services, which can enhance customer experience and accessibility. So when you look at these external factors, opportunities and threats, you're starting to identify opportunities to improve the business. Legal factors that can impact the post office is privacy laws related to mail handling, data protection also can dictate operational procedures. Um, another example is employment laws and, um, any sort of regulations that can impact staffing operational costs. Another example is compliance with international shipping laws and regulation, which is crucial for, for global operation for the post office. Really. So yeah, these are external factors. And the final one is the environmental factors, which can impact this post office is increasing focus on sustainability, which may require the post office to invest in eco-friendly vehicles, also looking at reducing its carbon footprint. Another one is the climate change impacts such as extreme weather conditions. It can disrupt mail delivery routes and schedules. So you see how that can impact the post office. So they need to find opportunities to sort of prevent that from impacting the schedules. Yep. Another one is environmental regulations regarding waste management. This can affect the disposal, recycling of packaging materials for the post office. So that's it. I hope those scenarios have helped, um, by conducting a personal analysis. This post office can now start to, like I mentioned, identify areas for potential growth and risks to the organization. It really will help them to strategize, to modernize their services, to optimize operations, uh, as well as enhance the customer experience while being aware of these external challenges and opportunities. So this is why personal analysis is really, really important for organizations to, to carry out. So as much as we've gone through this, how exactly are you doing it as a business analyst? How exactly are you performing the personal analysis work? What you do is to gather information from credible sources and consider all the six factors in detail. You want to seek continual updates, keep your personal analysis updated as external factors are constantly evolving. New rules are coming up all the time. Think about integration with analytical tool. Combine your personal analysis with internal analysis, uh, tools, such as your SWOT analysis, like I mentioned before, so that you can gain that well rounded perspective of your analysis as a business analyst. So you first, uh, a lot of time you first really want to understand what are we doing? Remember when I talked about the approach, uh, link to watch the video, um, you want to really, really understand what are we doing currently in understanding what we're doing currently, what are the issues that we're experiencing? What are our, um, strengths? What do we do well? What are our weaknesses? What are we not doing? Well, what opportunities exist for us to do better and what are our threats? Threats are external factors. What are those things that can impact our strengths and can also impact our opportunities? So it's a lot of analysis, a lot of thinking, a lot of collaboration and a lot of research as well. So you can see how varied the business analysis role. So that's it for today. I hope you found value in today's session, looking at one of the key analytical tools that we use as business analysts to add value to the organization and as part of our analysis work. If you have, please leave a comment section below to let me know what you think about the video. Um, and as always, please don't forget to like subscribe and share this content. You never know who might help till I see you in my next one. Peace.