Which of the following tools is used to analyze external factors that may impact a business?

The PESTEL analysis is specifically designed to evaluate the external factors that can influence a business's environment and performance. This framework categorizes external factors into six key areas: Political, Economic, Social, Technological, Environmental, and Legal. By examining these elements, businesses can identify potential opportunities and threats in their market landscape.

Using PESTEL enables companies to understand broader societal changes, anticipate shifts in regulations, assess economic trends, and gauge social dynamics that could affect their operations. This comprehensive analysis is essential for strategic planning, enabling organizations to align their strategies in response to external challenges and opportunities.

While other tools like SWOT can include external factors, they also focus on internal strengths and weaknesses. Cost-benefit analysis primarily evaluates the financial implications of decisions rather than external influences, and value chain analysis focuses on internal processes and efficiencies. Thus, PESTEL most directly addresses the need to analyze external factors impacting businesses.