How will this information be categorised in the PESTLE analysis?

A PESTLE analysis is being conducted for a small manufacturing company The following has been discovered.

The company’s electricity provider is planning changes to the way in which electricity usage is calculated, it is likely that this will lead to increased electricity costs.

An amendment to the Data Protection Act has recently been introduced It states that information held about employees’ payroll can now be held for more than six years, as long as the individual remains an employee

How will this information be categorised in the PESTLE analysis? Select the TWO that apply
A . Legal
B . Economic
C . Political
D . Technological
E . Environmental.

View Answer

Answer: AB

Explanation:

A PESTLE analysis is a technique for identifying and evaluating the political, economic, social, technological, legal and environmental factors that affect an organisation or project. It helps to assess the opportunities and threats that arise from the external environment. Therefore, options A and B are correct answers, as they are categories of factors that can be included in a PESTLE analysis for a small manufacturing company. They describe different aspects of the external environment that influence the company’s situation and prospects. Option A describes a legal factor, which is a factor related to laws, regulations, standards or policies that govern an organisation or project. An example of a legal factor is an amendment to the Data Protection Act, which affects how information about employees’ payroll can be held by an organisation. Option B describes an economic factor, which is a factor related to money, markets, trade or resources that affect an organisation or project. An example of an economic factor is a change in electricity usage calculation by an electricity provider, which affects how much electricity costs for an organisation. Option C is not a correct answer, as political is not a factor that has been discovered in the investigation for the PESTLE analysis. A political factor is a factor related to government, politics, power or conflict that affect an organisation or project. Option D is not a correct answer, as technological is not a factor that has been discovered in the investigation for the PESTLE analysis. A technological factor is a factor related to science, innovation, invention or discovery that affect an organisation or project. Option E is not a correct answer, as environmental is not a factor that has been discovered in the investigation for the PESTLE analysis. An environmental factor is a factor related to nature, ecology, climate or geography that affect an organisation or project.

Reference: BCS Practitioner Certificate in BAP Specimen, page 35.