PESTEL Analysis is summary of macro-environment. It Analysis is the scanning of External Environment on six criteria: Political, Economical, Social, Technological, Environmental, and Legal. It’s always useful to do PESTEL analysis before SWOT analysis.
Although a great variety of information is already available on the internet I will explain it here in brief.
Political Factors include Government Policies that affect the business domain; such as labor laws, tariffs, trading policies, etc.
Ecological factors may include taxation, inflation, exchange rates, interest rates, etc.
Social factors include demographics, career choices, ethical aspects, general trends, customer behaviors, etc.
Technological factors include innovation potential, technology incentives, present competing technologies, etc
Environmental factors like weather, climate change, local ecological issues, general ecological trends and views are to be considered.
Legal domain includes factors such as consumer law, employee law, health and safety law, antitrust law, etc.
Let me now take you to the simple Excel Template. Well you can use any format such as Word or plain paper, but Excel with its manipulating power with cells gives slight advantage. Out of all tools I think this one is one of the simplest. You just have to add 10 factors under each category. Again there is no restriction on number, but forcing you to add 10 most relevant factor may help you channelize your resources well.
You need to review these factors from time to time, as External Environment is always dynamic. Again let me remind you that PESTEL is the starting point of scanning of macro environment, and is usually followed by other methods such as SWOT. SWOT and Porter 5-Forces Analysis combined with PESTEL gives a complete picture of your current position in industry and larger business environment.
Please download the free PESTEL template: