Appendix 2: PESTEL Analysis Instrument

Identify the industry, market, and market segment.

1. Identify the industry, market, and market segment under analysis.
2. Place this in the instrument. 

Analyze data about the general environment.

Analysis is the process and result of examining all the data available for the case and identifying and classifying all the data for each category in a strategic management tool.

1. Methodically and thoroughly examine all the data available from the case about the general environment in relation to each PESTEL factor: political, economic, sociocultural, technological, environmental, and legal.
2. Identify and classify all the data for the general environment that relates to each PESTEL factor.
   1. The data needs to be specific to the case. (For example: “Governmental regulation of the [industry name] between [date 1 and date 2] results in [the specific impact].”)
   2. The data cannot be too broad. (For example: “Governmental regulation impacts profit” is too broad.)
3. Place the analysis in the instrument below in the section titled “Analysis.”

Interpret the analysis.

Interpretation is the process and result of examining the analysis to identify and explain relationships in the analysis and underlying root causes of the situation. Interpretation is not found in the case or company research. Interpretation applies critical thinking to the analysis conducted so far. Answer only those questions that add value to the overall process of working with the PESTEL to analyze the general environment. Interpretation begins to narrow the focus.

1. Examine the analysis of each PESTEL factor: political, economic, sociocultural, technological, environmental, and legal.
2. Identify and explain whether, how, and in what ways the information in the analysis is related.
   1. How does the analysis in each section of the PESTEL tool relate to each other?
      1. How do the different political factors relate?
      2. How do the different economic factors relate?
      3. How do the different sociocultural factors relate?
      4. How do the different technological factors relate?
      5. How do the different environmental factors relate?
      6. How do the different legal factors relate?
   2. How does one factor in the analysis with the PESTEL tool relate to another factor in the analysis? For example, how do the political factors relate to the legal factors? How do the technological and sociocultural factors relate to the environmental factors?
3. Identify and explain underlying root cause(s) of the situation.
   1. What may be causing the information identified in the analysis?
4. Place the interpretation in the instrument below in the section titled “Interpretation.”

Evaluate the analysis and interpretation.

Evaluation is the process and result of examining the analysis and interpretation to identify and explain the meaning of the information to the company; this is achieved by considering the information’s impact, relevance, and importance to the company and by identifying the company’s current, potential, or needed assets, organizational capacity, and managerial ability that may support or mitigate the areas of highest impact, importance, and relevance for the firm. Like interpretation, evaluation is not found in the case or company research. Evaluation involves applying critical thinking to the analysis and interpretation conducted so far. Answer only those questions that add value to the overall process of working with the PESTEL to analyze the general environment. Evaluation continues to narrow the focus.

1. Examine the analysis and interpretation.
2. Identify and explain whether, how, and in what ways the information in the analysis and interpretation part of the PESTEL analysis instrument impacts the industry and company.
3. Identify and explain whether, how, and in what ways the information in the analysis and interpretation part of the PESTEL analysis instrument is relevant to the industry and the company.
4. Determine in what ways the information in the analysis and interpretation important to the industry and the company.
   1. Action to take (if helpful): Rank the analysis and interpretation PESTEL analysis instrument according to strength of importance, such as strong, moderate, or weak.
5. Determine the company’s current, potential, or needed assets, organizational capacity, and managerial ability that may support or mitigate the areas of highest impact, relevance, and importance for the industry and the firm.
6. Place the evaluation in the instrument below in the section titled “Evaluation.”

Recommend action to the firm.

1. Make recommendations to the company to leverage opportunities in the general environment.
2. Make recommendations to the company to mitigate to threats in the general environment.
3. Place the recommendations in the instrument below in the section titled “Recommendations.”

Analysis Instrument