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ACCA Strategic Professional · Strategic Business Leader · Environmental issues

Deltaport, a logistics group, completed a PESTEL analysis last year and has since used it unchanged for its five-year plan. A director argues the analysis is sufficient because it lists all relevant factors. Which is the most valid criticism of this approach?

The valid criticism is that PESTEL is a static list. The macro-environment changes, so the analysis must be revisited regularly and factors prioritised by likely impact and uncertainty. Using it unchanged for five years risks planning on outdated assumptions and treating all factors as equally important.

  1. APESTEL ignores factors outside the industry, so it should be replaced with Porter's five forces
  2. BPESTEL is a static list; it should be updated and its factors prioritised by likely impact and uncertainty, since the macro-environment changesCorrect
  3. CPESTEL only covers legal factors, so other factors must be added
  4. DPESTEL analyses internal resources and so cannot assess external change

Explanation

PESTEL identifies external factors but a one-off listing becomes outdated and does not rank factors. Good use requires regular review and prioritising by impact and uncertainty, and linking to the industry. Porter's forces is complementary, not a replacement, and PESTEL is external, not internal.

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