PEST ANALYSIS
What is PEST?
PEST analysis – an acronym standing for Political, Economic, Social, Technological that refers to an analytical framework for external environmental factors affecting business objectives and strategies.
PEST is sometimes rearranged as STEP and has also been extended to STEEPLE (Social, Technological, Economic, Environmental, Political, Legal and Ethical)
Political
This factor looks at how government regulations and legal issues affect a company's ability to be profitable and successful. Issues that must be considered include tax guidelines, copyright and property law enforcement, political stability, trade regulations, social and environmental policy, employment laws and safety regulations. Companies should also consider their local and federal power structure, and discuss how anticipated shifts in power could affect their business.
Economic
This factor examines the outside economic issues that can play a role in a company's success. Items to consider include economic growth, exchange, inflation and interest rates, economic stability, anticipated shifts in commodity and resource costs, unemployment policies, credit availability and unemployment policies.
Social
This issue analyses the demographic and cultural aspects of the company's market. These factors help businesses examine consumer needs and determine what pushes them to make purchases. Among the items that should be examined are demographics, population growth rates, age distribution, attitudes toward work, job market trends, religious and ethical beliefs, lifestyle changes, educational and environmental issues and health consciousness.
Technological
This factor takes into consideration technology issues that affect how an organization delivers its product or service to the marketplace. Among the specific items that need to be considered are technological advancements, government spending on technological research, the life cycle of current technology, the role of the Internet and how any changes to it may play out, and the impact of potential information technology changes. In addition, companies should consider how generational shifts, and their related technological expectations, are likely to affect those who will use their product and how it is delivered.
PEST analysis – an acronym standing for Political, Economic, Social, Technological that refers to an analytical framework for external environmental factors affecting business objectives and strategies.
PEST is sometimes rearranged as STEP and has also been extended to STEEPLE (Social, Technological, Economic, Environmental, Political, Legal and Ethical)
Political
This factor looks at how government regulations and legal issues affect a company's ability to be profitable and successful. Issues that must be considered include tax guidelines, copyright and property law enforcement, political stability, trade regulations, social and environmental policy, employment laws and safety regulations. Companies should also consider their local and federal power structure, and discuss how anticipated shifts in power could affect their business.
Economic
This factor examines the outside economic issues that can play a role in a company's success. Items to consider include economic growth, exchange, inflation and interest rates, economic stability, anticipated shifts in commodity and resource costs, unemployment policies, credit availability and unemployment policies.
Social
This issue analyses the demographic and cultural aspects of the company's market. These factors help businesses examine consumer needs and determine what pushes them to make purchases. Among the items that should be examined are demographics, population growth rates, age distribution, attitudes toward work, job market trends, religious and ethical beliefs, lifestyle changes, educational and environmental issues and health consciousness.
Technological
This factor takes into consideration technology issues that affect how an organization delivers its product or service to the marketplace. Among the specific items that need to be considered are technological advancements, government spending on technological research, the life cycle of current technology, the role of the Internet and how any changes to it may play out, and the impact of potential information technology changes. In addition, companies should consider how generational shifts, and their related technological expectations, are likely to affect those who will use their product and how it is delivered.