There is no doubt that the landscape of the veterinary sector is changing rapidly. If you can identify the direction of change, you will be prepared to work with it rather than against which will benefit all involved. In this new management series, we will be introducing the concept of a PESTLE analysis as an analytical tool for your practice. In this first article, we will be looking at how a PESTLE works and the steps to work through for a successful analysis. Parts two and three will look at the six factors in more detail.
What is a PESTLE analysis?
A PESTLE analysis is a means of evaluating the key external factors affecting a business. The results can then be used to inform decision making in the organisation, spot trends, plan for future development and secure competitive advantage. Factors are assessed under six themes: political, economic, sociocultural, technological, legal and environmental (Figure 1).
A PESTLE analysis should be worked through methodically to ensure all areas are covered, and should be repeated regularly to monitor change. There are several possible approaches, but all will include the same steps (Figure 2).
Method: how to carry out a PESTLE analysis
1. Define the scope of your analysis
- Are you going to look at your immediate environment or the local, national or global factors?
- Would it be useful to focus on the current situation, potential future directions, or both?
2. Identify your sources
- Which sources of information are accurate, appropriate and reliable?
- Which sources are factual and which are opinion-based?
- What is the value of each?
3. Gather your data
- Identify which information you can use and record each aspect using a template
- It is good practice to involve others in your data collection to add different perspectives – could you do this as a practice or team exercise?
4. Analyse your data
- Assess which factors could have an impact on your team, your work or your organisation, and what that impact could potentially be
- Which of these factors could have the most significant impact? Use a scoring system or risk analysis grading such as low/medium/high, or a numerical score
- Consider the “what ifs” – again, it’s useful to involve others in thinking of theoretical situations and what their impact could be
5. Decide on the actions to be taken
- What could you do to address these significant factors?
- Discuss with team members and make plans to mitigate risks and take advantage of opportunities
6. Regular review
- Ensure your monitoring remains relevant and useful
- Repeat at least annually (preferably six-monthly)
Several extended versions of the PESTLE framework have also been developed, the most common of which is LONG-PESTLE. This framework takes each of the six PESTLE categories and analyses each in terms of local, national and global factors, resulting in a 6×3 matrix structure (Figure 3).
Why is PESTLE analysis useful?
A PESTLE analysis is useful in veterinary business in several ways. Firstly, it is useful for your business strategy. A PESTLE analysis can be used to identify risks as well as areas for organisational change. You can use it to set targets for growth, to identify emerging areas to develop new services and to position your brand in relation to your competitors, your local area and the veterinary sector more widely.
A PESTLE analysis can be used to identify risks as well as areas for organisational change
Secondly, the PESTLE framework can be used for workforce planning. This method allows you to evaluate the employment landscape – both locally and nationally – and help you to predict your future staffing needs. You can use it to predict future demand for your services and identify skills gaps in your existing workforce based on this information. You can also use several of the factors to inform your recruitment advertising – a better understanding of what potential new recruits will be seeking in an employer means you can better position your organisation as a desirable place to work.
You can use the results of your [PESTLE] analysis to prioritise the services you provide to fit consumer trends and client demands
Finally, a PESTLE analysis can be used to inform your marketing. You can use the results of your analysis to prioritise the services you provide to fit consumer trends and client demands. You can update your marketing objectives and identify new or growth markets that you may be able to explore expanding into, or launching new products to fulfil an identified need. Again, you can also use the analysis to differentiate your practice from your competitors in terms of service provision.
Challenges
The PESTLE analysis and its variants are well established in the business world. There are obvious advantages to having a better understanding of the environment in which your organisation operates; however, care must also be taken to avoid pitfalls such as making assumptions, or only looking at factors you are already familiar with. A good analysis will take time to do well, and it is crucial to identify reliable data sources and filter what is relevant and useful to your practice. Data can be insufficient or oversimplified, and it can be easy to make unfounded assumptions based on our own experiences, cultures and biases. To help address these, it is best practice to involve others in your analysis who will be able to bring different perspectives to what is going on in the world surrounding your practice. The pace of change in some areas means that analyses can become out of date easily, and the process will therefore need regular repeating to be most useful.
It is best practice to involve others in your [PESTLE] analysis who will be able to bring different perspectives to what is going on in the world surrounding your practice
In summary
The PESTLE method is a simple framework that can be useful in helping you to understand the wider business environment. In a busy practice, it can be very difficult to take a step back from the day-to-day and see the bigger picture in which your practice operates. Scheduling a quarterly PESTLE will encourage you to think strategically and provide you with an evidence base for the management decisions you make. You will be more able to anticipate future threats and take action to minimise impact, and to identify business opportunities to exploit.
