Advantages and Disadvantages of a PESTLE Analysis

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Advantages and Disadvantages of a PESTLE Analysis

 

Everything has both aspects and so does a PESTLE Analysis. Let us look at the advantages as well as the disadvantages of it.

 

Advantages

 

  • It is a simple framework- easy to understand and conduct

  • It facilitates a better and broader understanding of the business environment.

  • It encourages organizations to develop external and strategic thinking

  • The most talked advantage- it enables an organization to anticipate future business threats and allows it to minimize or nullify the impact

  • It also allows organizations to spot an opportunity and to capitalize on them

 

Disadvantages

  • Some PESTLE analysis users oversimplify the amount of data used for decisions – it’s easy to use insufficient data.

  • It’s easy to get lost in the enormous amount of data. So, there always remains a risk of capturing too much data and undertaking too much data analytics that may lead to ‘paralysis by analysis’

  • As a PESTLE analysis works on assumptions, there remains a risk of being wrong

  • Once in a while an attitude doesn’t work with PESTLE analysis. So, it must be a regular practice.

  • The pace of change makes it difficult to anticipate the developments and this may affect the organization in future

Conclusion

 

It can be stated that PESTLE analysis is a great tool for businesses that can be leveraged for several purposes. It brings information about the possible impact of the six external factors on an organization. This makes it easier for organizations to prepare for any sort of problems caused by these PESTLE factors.

Published by Henry