PEST analysis

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PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macroenvironmental factors used in environmental scanning. It is a part of the external analysis when doing market research and gives a certain overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

[edit] Overview

It is also referred to as the STEP, STEEP, PESTE, PESTEL, PESTLE or LEPEST (or Political, Economic, Socio-cultural, Technological, Legalohohoohogyiogti, Environmental). Recently it was even further extended to STEEPLE and STEEPLED, including education and demographics.

  • Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability.
  • Economic factors are economic growth, interest rates, exchange rates and inflation rate.
  • Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.
  • Technological factors include ecological and environmental aspects and can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors look at elements such as R&D activity, automation, technology incentives and the rate of technological change.

The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis. PEST/PESTLE alongside SWOT and SLEPT can be used as a basis for the analysis of business and environmental factors. [1]

[edit] References

  1. ^ Armstrong. M. (2006). A handbook of Human Resource Management Practice, 10th, London: Kogan Page. ISBN 0-7494-4631-5. 

[edit] External links