Context Of The Organisation Template

Introduction

Organisations have to consider the context that influences how they achieve their intended outcome. For example, ISO 9001:2015 specifies that an organisation has to determine its external and internal issues that influence the organisation. Although an organisation has to consider its internal factors, many of the critical success factors and problems emanate from external factors. A firm needs to utilise a PESTLE analysis template to scan and understand its external environment.

The Context Of The Organisation Demystified

The term context of the organisation refers to those internal and external factors that could influence the achievement of intended outcomes by the entity. An organisation has to embrace various strategic management approaches such as the PESTLE analysis in order to have a complete picture of the factors that influence its performance and strategy. Having a clear picture of the context in which it operates enables an organization to make informed decisions, identify opportunities and threats, and mitigate risks.

Although many internal analysis tools can help determine internal strengths and weaknesses, the PESTLE analysis template helps to review external factors that could present opportunities and threats to the organisation.

The PESTLE Analysis To Expose External Opportunities And Threats

PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors. A PESTLE analysis helps an organisation to fully understand the external environment that could positively and negatively affect the business. The main aim of a PESTLE analysis is to provide information on how external factors could impact an organisation. As a result, the analysis helps a firm to determine its internal and external contexts.

There are several benefits that come with embarking on a PESTLE analysis for an organisation.

• First, the analysis helps to facilitate informed business decision-making.

• Second, a PESTLE scan aids in determining potential risks, opportunities, and threats.

• Third, the analysis can be used to support strategic planning and decision-making.

• Besides that, a PESTLE scan can also help a business to identify key areas in which the firm might have an advantage over its competitors.

• Finally, the analysis helps to determine the impact of some external factors on the business strategy.

The PESTLE Analysis Template

A PESTLE analysis is usually a scanning process to help an organisation identify and understand its external environment. The factors that should be considered when conducting a PESTLE analysis are discussed below.

1. Political

These are factors that relate to how the government and the political system could affect the business. Examples of political factors include political stability, taxation system and policies, foreign trade policies, and tariffs, among others.

Impact: Political factors can have a significant impact on a business, therefore, should be taken seriously. Changes that take place in government can create new opportunities or threaten a business’s existence.

Template questions:

1. What government policies or regulations have an impact on our business? Such as trade, employment or environmental regulations?

2. What is the level of political stability in our area? What are the implications of political instability?

3. Are there upcoming political events such as elections and what impact will they have on our business?

4. What are the government’s stand and policies on monopoly, competition, subsidies and social responsibilities?

5. How do international trade agreements, embargoes and protectionism affect our business?

2. Economic

Economic factors are mainly related to the general state of the economy of a country or region where the business operates. Examples of economic factors include economic growth, interest rates, exchange rates, inflation rates, levels of employment and consumer buying patterns.

Impact: Economic factors have a direct impact on an organisation’s success and profit.

Template questions:

1. What is the current economic growth and prediction in our target country?

2. How will the current and predicted future interest rates impact our business?

3. What is the rate of inflation and how will it affect our production costs and consumer buying patterns?

4. How do exchange rates impact our exports and imports?

5. What are the employment rates and consumer buying patterns in our target country?

3. Social

Social factors are related to the demography and lifestyle of the target market and community where the business operates. Examples of social factors include consumer behaviour, societal culture and values, age distribution, and social trends, among others.

Impact: Changes in sociocultural factors can affect consumer buying patterns and affect talent acquisition since the workforce’s values and behaviour change.

Template questions:

1. What are the key elements of our target market’s sociocultural factors?

2. What are the current buying patterns and behaviours of our target market?

3. How are our target customers’ lifestyles changing?

4. How does the buying behaviour of our target market affect our business?

5. How do sociocultural factors such as community life, values, social attitudes and lifestyles affect our business strategy and operations?

4. Technological

Technological factors refer to changes in technology and the rate at which technological developments take place. Examples of technological factors include research, development and innovations, automation, and the application of technology in different industries.

Impact: Technological developments can have a great impact on a business, especially if the firm fails to embrace new developments and remain relevant.

Template questions:

1. Are there new and emerging technologies that could affect how our business operates?

2. How are technological developments likely to impact our business?

3. How will technological developments affect our target market?

4. How are existing technologies affecting our production and other business processes?

5. Will future technological developments create new markets?

5. Legal

Legal factors refer to the laws and regulations that apply to an organisation. Examples of legal factors include employment laws, consumer protection laws and policies, and other legal requirements applicable to the business.

Impact: Compliance with legal requirements is mandatory since a failure to comply with applicable laws and regulations could result in severe penalties and damage to the organisation’s image.

Template questions:

1. Are there legal requirements and regulations that affect our business?

2. Are there new laws and regulations that are likely to be implemented and how will they affect our business?

3. Do our business practices meet the requirements of existing and new laws and regulations?

4. How do international laws and regulations affect our business?

5. How do our marketing and advertising policies comply with the existing and new consumer protection laws?

6. Environmental

Environmental factors refer to the impact of the physical environment on the business and are applicable to all industries. Examples of environmental factors include climate change, clean air and water, and other environmental regulations.

Impact: Many organisations are placing greater emphasis on the environment, making it mandatory for firms to comply with the increasing number of environmental regulations and the demand for sustainability.

Template questions:

1. Are there environmental regulations that are applicable to our business?

2. How will environmental changes such as climate change affect our business?

3. How do environmental regulations affect our business?

4. Are there environmental changes that could affect the supply of materials and products?

5. How does our business impact the environment and what are the implications?

   

Turning Your PESTLE Findings Into Action

An organisation should use the findings from the PESTLE analysis to make informed business decisions. An organisation should utilise the results of the analysis to support the decision-making process.

For example, a firm can prioritise those key factors that have a great impact on the business. In addition, a firm can use the PESTLE findings to create a SWOT analysis in which the strengths and weaknesses are matched against the opportunities and threats.

Finally, the results from a PESTLE analysis should also be used as a basis for developing scenarios that can help support business planning, decision-making and implementation of action plans.

A Complete Picture Of Your External Environment

Understanding the context of an organisation is critical for a firm to achieve its intended outcomes. PESTLE analysis helps a business to get a complete picture of the external factors that could affect its performance and strategy. The factors considered in the PESTLE analysis provide an organisation with the opportunity to be more prepared and therefore take advantage and profit from emerging trends, opportunities and minimize the adverse impacts of possible threats.