How NMBL Strategies Utilizes a PESTLE Analysis

One of our most popular blogs is our Four Alternatives to a SWOT Analysis blog post which sees thousands of views each month, but a common question we get is how does NMBL utilize these different approaches to a SWOT Analysis. There isn’t a one size fits all solution. While it can be a simple replacement for the SWOT analysis, we tend to utilize a different approach at NMBL Strategies. We utilize the PESTLE analysis to do a full review of the environment of our client’s industry, taking a look at the trends and common practices within the industry under each of the PESTLE categories (Political, Economic, Social, Technological, Legal and Environmental). These six categories have a lot of information that can be digested to inform the strategy and plans going forward for your organization. One thing that is important to consider about NMBL’s approach is that none of these are focused on the organization, they are focused on the industry. Let’s take a look at how we apply each category.

Political

In the political section, we take a look at potential changes to the law that could affect the organization as well as the political interests of the organization at a local, state, and federal level. This perspective is important in giving a forward look to what could impact the industry and ultimately the organization. A good example of this is when COVID hit many expected the economy to take a dramatic hit (which is why we saw the stock market crash in the first month). However, on the political level for those paying attention, the Payroll Protection Program was issued, and many organizations were not hit as hard as they may have expected. If you were a bankruptcy attorney, your expectation of how busy you would be would shift dramatically from what was expected at the beginning of the pandemic to what actually occurred as bankruptcy filings fell 29.7% from 2019 to 2020.

Economic

Looking at the economic trends for your industry is critically important. Knowing how you will finance your growth, fund a start-up, or grow donations relies upon macro-trends in our society. Understanding how those apply to your organization allows you to capitalize on the right trends at the right time. Utilizing the view of a different industry but same time period as we did for the Political section, nonprofits typically see their funding follow the stock market. When times are tough in the stock market (see 2008-2009) donations dry up for nonprofits. So, in 2019 when COVID hit and the market crashed many nonprofits went into panic mode and cut as many expenses as possible. What came over the next year was the most philanthropic year in history (coinciding with a markets rise). In some cases—like museums and other attractions that rely on visitors—increased giving was not enough to offset the loss of earned income. This year, 2021, which has seen the market continue to rise, has been different. One economic feature that has not typically been examined in respect to nonprofits was the fact that in 2020 most people could not go anywhere (either for meals or for vacations), so they spent a lot less during the year, giving them more disposable income that could be used for giving. In 2021, travel has opened back up and many people have returned to restaurants, meaning they have less disposable income to donate. Understanding all of these economic trends is critical to finding the right places to maximize your plans.

Social

When looking at social impacts on your industry, there are many things that should be considered: staffing, views towards products or services, interests from the public, etc. The fast food industry has displayed all of these over the years, from considerations upon the health of fast food (views towards products or services), the rise in wages that has occurred during the current COVID pandemic (staffing), and the change of menus to include plant based meat alternatives (interests from the public). All of these considerations affect how the industry evolves. These types of impacts are critical to understand the future of your industry. Additionally, relating to the public is critical to ensuring your organization’s strategy is pointed in the right direction.

Technological

This can include many aspects of technology, from cloud computing to AI to social media. All of these have dramatic impacts on your industry. Without understanding the trends that will most affect your industry moving forward, your organization may get left behind. The impact of social media has been dramatic for organizations across all industries. Many nonprofits have been slow adapters to technology of any sort but especially to fundraising through social media. However, for those that made the preparation and adaptation early on, they have seen social media be a great referral source for new and renewed donations. In many cases, these donations have come at a much lower cost than their peers utilizing more traditional methods like direct mail. Artificial Intelligence will likely have a similar impact on many industries and understanding how it will impact your industry, as well as the opportunities that will arise from it, is critical to maximizing the future of your own organization.

Legal

What are some of the most pressing legal issues that affect your industry? Does your organization take on products liability? Is there a concern about slip and fall lawsuits? Are there tax laws that are unique to your industry? Is there liability you aren’t aware of? Identifying the legal risks and opportunities in your industry is critical to making sure that you are prepared for your future. This section should take a look at how current laws and potential liability affect your industry, as well as how potential law changes or new laws can affect your organization. For this reason, it can cross-over and significantly play off of the political section of this analysis.

Environmental

This section can often get overlooked, but has many impacts on organizations and industries. If you are a manufacturing company looking to set up a new shop in Louisiana, hurricanes would need to factor into your decision process. If you are a park space and rely upon a major funding event every year to sustain your organization the weather on the day of the event can dramatically impact your organization. These and many other environmental factors play a role in our decision-making and planning, Make sure you understand the environmental impacts to your industry so that you can apply them to your organization.

Need help understanding how to identify all the external impacts of your industry? NMBL Strategies utilizes this analysis regularly to ensure our clients are prepared for any opportunities and threats. Shouldn’t your organization be prepared?