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PESTLE Analysis
A multi-dimensional analysis of the context of the organization for the purpose of establishing value and developing goals and policies.


Purpose of the Analysis
The primary objectives of the PESTLE Analyis are listed below.
  • To identify isseus that can influence the design and scope of the asset management system (AMS)
  • To provide baseline information for a Current State Analysis (as-is)
  • To determine the roadmap for an appropriate Future State (To-be)


Scope of the Analysis
Listed below are the different facets/dimensions of the PESTLE analysis.
The following table provides a simple example of a PESTLE Analysis.



Political scan

     External
  • Reputation in the industry and global marketplace,
  • community influence,
  • etcetera.
      Internal   
  • Reputation in the local community and neighboring property owners;
  • municipal zoning bylaws,
  • etcetera.


Economic  

      External
  • Interest rates
  • Inflation rates
  • Taxation rates
  • Unemployment trends
  • Economic growth
  • Travel trends, multi-modal transit
  • Fuel costs (gas and electricity),
  • etcetera  
      Internal
  • Staff efficiencies
  • Staff productivity; size and adequacy of the organization's replacement reserve fund
  • Impending capital projects,
  • etcetera.


Social   
Population growth, demographic trends, language barriers, community drug use, etc.    Age, sex and race profiles of AATC staff/workforce; impending retirements of key staff; motivation of staff; staff morale, etcetera.


Technological   
External
Rate of technological change, availability of software products, digital fiber, etcetera   

Internal
Hardware, software for staff; high speed internet access; etcetera.


Legal   

External
  • Federal and State consumer protection laws, labor laws, health and safety laws, etcetera   
Internal
  • Statutory right of way agreements, easement agreements, lease agreements, service partner agreements; etcetera.


Environmental   

External
  • Weather conditions, climate change, local pollutants
  • Regional fauna and flora
  • Proximity to water bodies
  • etcetera.   
Internal
  • Energy efficient equipment
  • Energy consumption
  • Water table
  • Geology
  • Soil conditions
  • Micro-climate
  • Fuel storage
  • Asbestos, PCNs, lead in facilities
  • etcetera.



PESTLE and SWOT correlations


Stage 1: PESTLE

P.E.S.T.L.E.

External Factors

Internal Factors

Political

   Labour laws

   Environmental laws

   Community influence over municipal decision making

   etcetera…

   Reputation in the community

   City zoning regulations around the community

   Developer influence around the community

   etcetera…

Economic

   Interest rates

   Inflation rates

   Taxation rates

   Unemployment trends

   Economic growth

   Workforce education/training

   Fuel costs (gas, hydro)

   etcetera…

   Staff efficiencies

   Staff productivity

   Reserve fund status

   Capital projects

   Energy efficient equipment

   Energy consumption

   etcetera…

Social

   Population growth rates

   Demographic trends

   Language barriers

   Community drug use

   etcetera…

   Age of staff/workforce

   Retirement of staff

   Motivation of staff

   etcetera…

Technological

   Availability of software products

   Rate of technological change

   High speed internet access

   Multi-modal transit

   etcetera…

   Hardware for staff

   Software used by staff

   Direct digital controls on HVAC equipment

   Car/vehicle ownership

   etcetera…

Legal

   Labour/Employment laws

   Discrimination laws

   Environmental laws

   Health & safety laws

   Consumer Protection laws

   etcetera…

   Contracts with 3rd parties

   Lease agreements

   Right of way agreements

   Easement agreements

   Bylaws, rules and regulations

   Active warranties on assets

   etcetera…

Environmental

   Weather conditions

   Climate change

   Local industry pollutants

   Environmental laws

   Proximity to ocean/lakes

   etcetera…

   On site streams

   On site catch basins

   Asbestos in buildings

   Water table

   Hydrology on the site

   Topography of the site

   Endangered species (fauna/flora)

   etcetera…



Stage 2
The following table provides an example of a PESTLE Analysis correlated to a SWOT Analysis

 

Organization ABC

 

Strengths

Weaknesses

Opportunities

Threats

Political

 

  AHS has a poor reputation in the community from an incident that occurred a few years ago

 

  Four new developments under construction on neighbouring properties

Economic

   The AHS team is well educated and trained

  The reserve fund is low and not adequate for some upcoming projects

  High energy consumption of some assets

   Staff efficiencies/ productivity can be improved

   New energy efficient equipment can be installed to lower gas and electricity costs

  Large capital projects need to be funded over the next few years

  Increased fuel costs are hard on the operating budget

Social

   AHS has well defined job descriptions

  Low motivation of some staff

   Hire a 2nd maintenance manager

  Ageing workforce

Technological

   High speed internet access

  Not all staff is computer savvy

   Direct digital controls on HVAC equipment can be enhanced to reduce operating costs

 

Legal

 

  Not all assets covered under service contracts

 

 

Environmental



  On site streams and catch basins are not protected

 

  Neighbouring industry is causing pollutants

 

3

7

4

4



Stage 3
The following table provides and example of the PESTLE and the SWOT converted into goals and policies
.

 

Organization ABC

 

Goals

Policies

Political

To enhance the organization’s reputation in the local community.

All contracts shall be reviewed by senior management staff

Economic

To maximize interest income in the organization’s reserve fund and to ensure adequate cash flow by purchasing the appropriate investment vehicles

All savings shall be deposited into Guaranteed Investment Certificates (GICs) with maturity timeframes that match the remaining useful life of the assets identified in the capital plan.

Social

To develop a succession plan for senior members of staff who may retire over the next five years.”

All new hires shall undergo the safety training program

Technological

To equip all staff with appropriate technology supported by a central database of all the organization’s asset records

 

Legal

To ensure that the organization is not exposed to undue risk and complies with all regulatory authorities

The organization shall only hire suitably qualified maintenance contractors who have been pre-qualified to demonstrate their competence

Environmental

To protect all onsite water sources from pollution from resident’s vehicles.

All catch basins shall be inspected annually




Process
Listed below are some of the keys steps associated with the PESTLE Analysis
  • Arrange a workshop of knowledge resources
  • Conduct PESTLE Analysis - identify each context (social, economic, etc)
  • Conduct SWOT Analysis
  • Corrrelate PESTLE to SWOT
  • Communicate the findings
  • Goals - Establish objectives for the organization
  • Policies - Establish policies that correlate with the goals.
  • Strategy - Develop strategy to satisfy the goals.
  • Update the PESTLE periodically to reflect changing circumstances


Benefits of a Context Scan
  • Awareness of Issues & Trends – An understanding of its external and internal contexts will help the organization raise its awareness about issues and trends.
  • Effective Communications with Stakeholders – Information on the contexts can be used to effectively frame the discussions with the organization’s stakeholders.
  • Design of the Asset Management System -  An understanding of the nature and complexity of the context issues will help the organize establish an appropriate scope and boundaries for its asset management system.
  • Development of Policy and Strategy – An understanding of the various contexts (legal, political, social, technological, economic and environmental) will inform the organization in the development of appropriate policy, strategy and plans.
  • Appropriate Treatment of Risks – Awareness and analysis of issues will ensure that risks are identified and appropriate managed.





Evaluation
Listed below are some of the merits and advantages of a PESTLE Analysis
  • Provides a high level analysis
  • Relatively easy and cost effective to develop
Listed below are some of the limitations and disadvantages of a PESTLE analysis:
  • May not produce actionable data
  • Only provides a snap shot in time and must therefore be updated periodically
Every organization is influenced by a multi-faceted context. These facets should be recognized as landmarks that will orient the organization ast it navigates a path along the asset management journey
Fig.  Every organization is influenced by a multi-faceted context. These facets should be recognized as landmarks that will orient the organization ast it navigates a path along the asset management journey.


Financial "knots" must be addressed carefully or they may get even tighter
Fig. Financial "knots" must addressed carefully or they may get even tighter.


Workshops help to elicit qualitative data within the organization
Fig. Workshops help to elicit qualitative data from knowledge resoruces within the organization for the purpose of compiling the PESTLE Analysis.


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Fig. Organizational "knots" (problems) require patience and finesse to untangle them -- or they will get even tighter.  Do you know how to untangle the knots in your organization?


The journey to asset management maturity may sometimes feel like a maze
Fig. The journey to asset management maturity may sometimes feel like a maze.

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