PEST Analysis

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


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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)




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


Work/career and leisure attitudes

Entrepreneurial spirit

Life cycle and speed of technological obsolescence

Government organization / attitude

Exchange rates


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.

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PEST Analysis Special Interest Group

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Best Practices - PEST Analysis Premium

Expert Tips - PEST Analysis Premium

How to Analyze the Strategic Significance of some External Trend?Sign up

To think over which of the trends in the PEST anal...
Usage (application): Analysis of Macro-environment, Strategic Environment

Advanced Ways of Applying PEST AnalysisSign up

When you are examining the external environment of...
Usage (application): Analysis of Macro-environment, Strategic Environment

Extensive 12-Factor PEST AnalysisSign up

Marketing Consultant Geri Clark recommends a very ...
Usage (application): International Strategic Environmental Analysis

WHEN to use PEST analysis? Situations and Application AreasSign up

A PEST-analysis contributes to the success ...
Usage (application): PEST Analysis, Application Areas, Analysis of Macro-environment

How to Refine my Initial PEST Analysis?Sign up

A PEST analysis can further be refined by incorpor...
Usage (application): Advanced PEST Analysis

Why Society is More Risky than BeforeSign up

In his 1992 book "  

Government Policies / Economic Policy Tools in PEST AnalysisSign up

Governments use several economic policy tools to a...
Usage (application): PEST Analysis, Government Analysis, Analysis of Macro-environment, Strategic Environment

Resources - PEST Analysis Premium

PEST Analysis TemplateSign up

MS-Excel template for conducting a PEST Analysis f...
Usage (application): PEST Analysis

External Environment In-depth: Sub-types and How to Manage ThemSign up

This presentation covers the topic of external env...
Usage (application): External Environment, Environmental Scanning, Environmental Management, Competitive Environment

PEST Analysis for Small and Medium-sized CompaniesSign up

Ian Johnson summarizes the PEST Framework in the c...
Usage (application): Initial Understanding of PEST Analysis, Summary

Introduction of the P of PEST Analysis: PoliticalSign up

Short introduction to the P of PEST Analysis:
Usage (application): Initial Understanding of PEST Analysis

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Compare with: SWOT Analysis  |  OODA Loop  |  Simulation  |  Five Competitive Forces  |  Stakeholder Analysis  |  Stakeholder Mapping  |  Benchmarking  |  Scenario Planning  |  Diamond Model  |  Strategic Risk Management

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