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.
|
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? Thi..." |
|
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 th..." |
|
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 org..." |
|
|
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 analys..." |
|
|
Organisational Analysis
"I would be grateful if I could be permitted to refer to the contents on this text. I will acknowledge the source." |
|
|
Economic Policy Tools
"Governments use several economic policy tools to achieve a set of goals. Managers of industry must have their focus on on these policies so as to ensure that their businesses survive. These economic p..." |
|
|
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..." |
|
|
How to use PEST - Application variants
"When you are examining the external environment of a firm through a PEST ANALYSIS, besides the obvious understanding of the CURRENT STATUS of the factors or trends (which ones are they, their current ..." |
|
|
POET, variant of PEST
"Because I consult to defense agencies, I've had a hard time getting them to grapple the Societal / Social category in workshops. Even with "seed" examples. So, I am going to try a variant - I'm goin..." |
|
Keep in touch with this topic
|
|
|
|
|
PEST Analysis Special Interest Group
|
|
|
|
Compare with: SWOT Analysis
| OODA Loop |
Simulation |
Five Competitive Forces
| Stakeholder Analysis
| Stakeholder Mapping
| Benchmarking |
Scenario Planning |
Diamond Model |
Strategic Risk
Management
Return to Management Hub: Finance & Investing | Knowledge & Intangibles |
Marketing | Strategy
More Management Methods, Models and Theory
|
|
|
|
Keep in touch with this topic
|
|
|
Options
|
|
12manage for:
|
12manage in:
|
|
|
|
|
|
Log in
