How To Use A PESTEL Analysis For ISO Context Analysis

Last month we looked at the ISO clause relating to the context of your organisation - how your company must determine external and internal issues that are relevant to your purpose and strategic direction, and that affect your ability to achieve the intended result(s) of your Management System. 

Information can be obtained via interviews with relevant Top Management in relation to your organisation’s context and its strategic direction, the identified issues and conditions, and how these may affect the intended outcomes of your management system.

Identifying external issues

External issues might include political, financial or economic trends, customer demographics or emerging product developments. You should undertake a PESTLE analysis in order to establish a suitable understanding of these circumstances, and the market in which your business operates at the macro level.

PESTLE analysis provides a framework for measuring market and growth potential according to external political, economic, social, technological, legal and environmental factors. External issues might typically be influenced by the following:

• Cultural, social, political and regulatory;
• Innovation, technology, industry requirements, market requirements, suppliers and partners;
• Financial, economic, natural and competitive issues, whether international, national, regional or local;
• Quality, safety and environmental conditions capable of affecting or being affected by your organisation.

Sources of information relating to external issues might include:

• Reports relating to market environment, economic conditions, new technology, new markets, customer expectations;
• Reports relating to supplier intelligence, political considerations, investment opportunities, social factors etc;
• Identification of factors relating to changes in legislation and regulation, including environmental and H&S impact;
• Feedback relating to product/service performance and lessons learned;
• Register of identified external risks and their treatment.

A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis. This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area, and should be centred around the following:

What is happening politically in the environment in which we operate?

• Trading policies;
• Funding, grants and initiatives;
• Domestic market lobbying/pressure groups;
• International pressure groups;
• Wars and conflict;
• Government policies, term and change;
• Inter-country relationships and attitudes;
• Political trends;
• Internal political issues;
• Shareholder needs and demands.

What is happening with respect to ecological and environmental issues?

• General market conditions that affect the business;
• Market direction;
• Environmental issues;
• Environmental regulations;
• Stakeholder/investor values;
• Needs for the organisation’s products and/or services in the market;
• Customer market technology opportunities;
• Competitors and differences between competitors;
• Competitiveness of the organisation and what affects its ability to compete;
• Customer problems and complaints with current products and services.

What is happening technology-wise which can impact what we do?

• Maturation of existing technologies;
• Technological developments or trends that affect or could affect the business;
• New product development and potential markets: government, international, resource sector, etc;
• Productivity improvements through automation;
• Telecommunication infrastructure;
• Online connectivity and digital data.

What is occurring socially and culturally in the markets in which we operate?

• Current or emerging trends in lifestyle and their implications;
• Demographic trends that may affect market size (growth rate, income, population shifts);
• Whether these trends represent an opportunity or a threat;
• Changes in consumer behaviour;
• Increasing environmental awareness;
• Urbanisation;
• Consumer demands (e.g. personalisation and high-end experiences);
• Public demand for transparency and participation in decision-making.

What is happening with changes to legislation?

• Possible changes in regulation/legislation;
• Impacts of these changes on business;
• Stability of government;
• Outsourcing regulations;
• Government bureaucracy – rules and regulations;
• Legal constraints.

What is happening within the economy?

• National and internal financial trends (trends in economic forces);
• Economic trends that may have an impact on business activity;
• Emerging markets;
• Inflation, employment levels, supply;
• Energy available;
• Global financial situation.

Examples of external issues suitable for PESTLE Analysis include:

• Cultural, social, political, legal, financial, technological, economic and natural surroundings including the environment in which the organisation operates;
• Who the competitors are and any contractors, subcontractors, suppliers, partners and providers;
• National and international law;
• Industry drivers and trends which have influence on the organisation;
• The organisation products and services and their influence on occupational health and safety.

If you would like to look at how to implement an ISO management system, then simply contact us.Or, if you want to see what's involved in more detail, then get a completely free, no obligation, totally tailored ISO Gap Analysis for your business (only available to UK businesses).