PESTEL analysis template (Word)

What it is

PESTEL is a checklist for scanning an organization's outside environment: Political, Economic, Social, Technological, Environmental and Legal factors. It extends the older PEST scan with environmental and legal factors, and you will see other variants of the name.

A PESTEL scan describes the world around you, not your own strengths. It answers: which outside changes could affect our plan, how likely are they, and how much would they matter?

Who it is for

Strategy and planning teams, founders preparing for a new market, analysts writing an industry section, and students. It works best when more than one person scores it.

When to use it, and when not to

• Use it when entering a new country or market, when planning for the next three years, or when something external, such as a rule change, a shock or a technology shift, makes you re-check the plan.
• Use it to build a shared list of outside risks and opportunities with sources.
• Do not use it as a forecast. It organizes evidence and judgment. Re-run it when conditions change.
• Do not use it for competitor analysis. Use the five forces template for industry structure and the SWOT template to bring outside and inside together.

What is inside

A Word document in landscape layout with:

• a how-to box, a scope table and a scoring guide;
• six factor sections, each with prompts and an eight-column table (development, evidence and source, opportunity or threat, likelihood, impact, score, time horizon, what it means for us);
• a section on reading across the six factors;
• a ranking table with a response, an owner and a date;
• a signals-to-watch table; and
• a quality checklist.

How to fill it in

1. State the decision or plan the scan supports, and the markets and time horizon.
2. Work through the factors. List only developments that could change your results, each with a source and a date.
3. Mark each development as an opportunity, a threat or mixed.
4. Score likelihood and impact from 1 to 3 and multiply. Agree the scores with at least one other person.
5. Rank the top factors and write the response, an owner and a date. A score of 6 or more is a sensible trigger for a response, and you can set your own cut-off.
6. List the signals you will watch, where you will look, how often and what level triggers action.

Worked example (an illustration)

Illustration only. The business, the developments and the scores below are made up, to show how the scoring works. They are not real data.

A made-up electric bicycle rental business in a mid-size city. Likelihood and impact are scored 1 to 3 and multiplied.

Two developments score 6 or more, the bike lanes and the cost of financing, so they get a response and an owner: plan routes around the new lanes, and fix the cost of funding before ordering more bikes. The rest go on the watch list.

Common mistakes

• Listing trends with no link to your decision. Ask “so what for us?” for every row.
• Mixing facts and forecasts. Say who made a forecast and when.
• Scoring everything high. If every row scores 9, nothing is ranked.
• Doing the scan once. Put the signals in a calendar and revisit them.
• Forgetting to define the markets. Rules and conditions differ by country.

Download

Free to download. The numbers in the file are made up, so replace them.

Use and limits

Free to use and adapt for your own work. If you publish or share it, a link back is appreciated.

Sources and further reading

Sources are linked so you can check them. Statements that vary by employer, or that accounts disagree about, are hedged in the text. Found a mistake? Email support@forwardeployed.work and we will correct the page and update its date.

1. PEST analysis. Encyclopedia entry, which also covers the variants of the name.
2. Strategic management. Encyclopedia entry.