PEST Analysis

Scanning the external macro-environment in which a firm operates. Explanation of PEST Analysis. STEEPLE.

What is PEST analysis? Description

The PEST analysis is a framework that strategy consultants use to scan the external macro-environment in which a firm operates. PEST is an acronym for the following factors:

Political
Economic
Social
Technological

PEST factors play an important role in the value creation opportunities of a strategy. However they are usually outside the control of the corporation and must normally be considered as either threats or opportunities. Remember macro-economical factors can differ per continent, country or even region, so normally a PEST analysis should be performed per country.

In the table below you find examples of each of these factors.

Political (incl. Legal)

Economic

Social

Technological

Environmental regulations and protection

Economic growth

Income distribution

Government research spending

Tax policies

Interest rates & monetary policies

Demographics, Population growth rates, Age distribution

Industry focus on technological effort

International trade regulations and restrictions

Government spending

Labor / social mobility

New inventions and development

Contract enforcement law

Consumer protection

Unemployment policy

Lifestyle changes

Rate of technology transfer

Employment laws

Taxation

Work/career and leisure attitudes

Entrepreneurial spirit

Life cycle and speed of technological obsolescence

Government organization / attitude

Exchange rates

Education

Energy use and costs

Competition regulation

Inflation rates

Fashion, hypes

(Changes in) Information Technology

Political Stability

Stage of the business cycle

Health consciousness & welfare, feelings on safety

(Changes in) Internet

Safety regulations

Consumer confidence

Living conditions

(Changes in) Mobile Technology

Completing a PEST Analysis is relatively simple, and can be done via workshops using brainstorming techniques. Usage of PEST analysis can vary from: company and strategic planning, marketing planning, business and product development, and research reports.

Variants of PEST Analysis

Sometimes extended forms are used, such as SLEPT Analysis (plus Legal) or the STEEPLE Analysis: Social/demographic, Technological, Economic, Environmental (natural), Political, Legal and Ethical factors. Also Geographical factors may be significant.

PEST Analysis Forum (16)

Technology Marketing and Economic Analysis in Utilities
"A small developing economy creates a new government funded R&D company to streamline and consolidate efforts in R&D on energy, water, and technology development. How should the divisional head of Technology Marketing and Economic analysis go about setting up the department and what should his/her priorities be?"

How to Conduct a PEST Analysis? Main Steps and Tips
"Is there a specific way in performing a PEST analysis, or is there no particular order?
I really want a guideline as to how I should perform a PEST analysis. Any other practical tips are also welcome..."

BOOK: The SPELIT Power Matrix
"'The SPELIT Power Matrix: Untangling The Organizational Environment With The SPELIT Leadership Tool' by Leo A. Malette is a book available on Amazon which is similar to PEST. It details how to internally and externally assess an organization utilizing the Social, Political, Economic, Legal, Intercultural and Technological aspects of the organization. The book is very detailed and can be used to deeply analyze the organizational environment using this model."

Environmental Factors in PESTLE
"In PESTLE, what are examples of typical environmental factors? Thank you."

Advanced form of PEST: PESTELEM Analysis
"An advanced form of PEST analysis is called PESTELEM
Political
Economic
Social
Technological
Ecological
Legal
Ethical
Media
Now what is the difference? This kind of PEST is more accurate and offers more diverse look on business context.
If there are any questions I will gladly answer them..."

Unfavorable External Environment?
"When do I realize that the environment I am operating in is not favorable to my organization? And what should be the immediate response?"

External Environment of a Service Company
"I need to examine the external environment of a recruitment company (for my dissertation), and I'm looking for a model that I can use. Of course I will use the PEST method, but that will only cover the macro environment. Does anyone know a model or method to examine the micro environment for a recruitment company?"

PEST Analysis for a Country
"Does anyone know where I can get a PEST analysis on a country, such as the Czech Republic?"

PEST Analysis Standard Format?
"I have to do a PEST analysis. Is there a standard format (like SWOT)."

PEST Analysis on Retail
"Does anyone have a pest analysis on a retail industry. Thanks."

Extension of PESTEL + C (=Competitors) Analysis
"In discussions with a tutor at Deltic Training College (Mark Northway), it has been suggested that a 'C' should / ought to be added - standing for Competitors / Competition. This would save organisations from the need to do a benchmarking exercise too when assessing their strategic position."

PEST Analysis is Complementary to SWOT Analysis
"PEST is one of the essential tool to supplement the SWOT analysis. PEST is the external environmental analysis in which opportunities and threats derive. Conducting PEST will be useful for SWOT analysis."

Other Marketing Environment Tools
"Apart from this PEST framework used to analyze the macro environment, which other technigues can be used?"

Organisational Analysis
"I would be grateful if I could be permitted to refer to the contents on this text. I will acknowledge the source."

System Risk in PEST Analysis
"As per recent global recession, how do you include in PEST analysis the risk factor due to mass negligence of control mechanism in financial sector in developed countries both by Government and public?"