The new decade demands clarity of understanding of the business environment. Like the previous best practice (SWOT Analysis), a PESTLE Analysis is another strategic planning framework and process all franchisors should complete as part of their comprehensive franchisor business plan and for maintaining a strong governance focus on the future.
Where else would you consider potentially impactful areas, such as artificial intelligence, government policies, changing social attitudes, new media, climate change, economic cycles, business laws and so on?
The PESTLE Analysis, in particular, is crucial for identifying relevant environmental trends – including the opportunities / threats they provide.
PESTLE is an acronym for six categories of organisational environmental forces, namely:
- Political
- Environmental
- Social
- Technological
- Legal, and
- Economic
See the following illustration for individual examples by category.
Not surprisingly, strategic planning frameworks like the PESTLE Analysis are increasingly essential to franchisors given the need to navigate an established franchisor business (and aligned franchise network) through an increasingly dynamic operating environment with multiple disruptive forces. A franchisor, and their advisors, clearly need to consider how these factors may impact (including what opportunities they may afford) and what they are going to do about them. They can then think about how franchisees may be more strategically involved in researching and planning potential systemwide changes.
As always there is a need to consider a rating and ranking system, as there are so many areas that could demand attention. A thorough assessment will help a franchisor to narrow down those areas that are suitably important and can practicably be addressed.
Best practice franchisors will conduct an annual PESTLE Analysis as part of their comprehensive franchisor business plan, although some areas will clearly require much greater (and potentially ongoing) time and attention. The PESTLE Analysis also feeds nicely into a SWOT Analysis and many other components (e.g., Franchise Technology Plan) of the franchisor business plan.
About the Franchising Best Practice 500 Series
This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.
We have assembled the first 40 best practices into The Best Practice Handbook, which is available for purchase.
