PESTEL analysis is a strategic tool used to evaluate the external factors that can impact an organization. The acronym stands for Political, Economic, Social, Technological, Environmental, and Legal factors. By examining these areas, businesses can identify potential opportunities and threats in their operating environment, helping them make informed decisions. This analysis is particularly useful for understanding market dynamics and guiding strategic planning. For instance, changes in government regulations or shifts in consumer behavior can significantly influence a company's success. By regularly conducting PESTEL analysis, organizations can stay proactive and adapt to changing conditions.