Introduction to Pest Analysis
Introduction to PEST analysis
PEST analysis is concerned with the environmental influences on a business.
The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
Political / Legal Economic Social Technological
- Environmental regulation and protection - Economic growth (overall; by industry sector) - Income distribution (change in distribution of disposable income; - Government spending on research
- Taxation (corporate; consumer) - Monetary policy (interest rates) - Demographics (age structure of the population; gender; family size and composition; changing nature of occupations) - Government and industry focus on technological effort
- International trade regulation - Government spending (overall level; specific spending priorities) - Labour / social mobility - New discoveries and development
- Consumer protection - Policy towards unemployment (minimum wage, unemployment benefits, grants) - Lifestyle changes (e.g. Home working, single households) - Speed of technology transfer
- Employment law - Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates) - Attitudes to work and leisure - Rates of technological obsolescence
- Government organisation / attitude - Exchange rates (effects on demand by overseas customers; effect on cost of imported components) - Education - Energy use and costs
- Competition regulation - Inflation (effect on costs and selling prices) - Fashions and fads - Changes in material sciences - Stage of the business cycle (effect on
PEST analysis is concerned with the environmental influences on a business.
The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarizing the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
Political / Legal Economic Social Technological
- Environmental regulation and protection - Economic growth (overall; by industry sector) - Income distribution (change in distribution of disposable income; - Government spending on research
- Taxation (corporate; consumer) - Monetary policy (interest rates) - Demographics (age structure of the population; gender; family size and composition; changing nature of occupations) - Government and industry focus on technological effort
- International trade regulation - Government spending (overall level; specific spending priorities) - Labour / social mobility - New discoveries and development
- Consumer protection - Policy towards unemployment (minimum wage, unemployment benefits, grants) - Lifestyle changes (e.g. Home working, single households) - Speed of technology transfer
- Employment law - Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates) - Attitudes to work and leisure - Rates of technological obsolescence
- Government organisation / attitude - Exchange rates (effects on demand by overseas customers; effect on cost of imported components) - Education - Energy use and costs
- Competition regulation - Inflation (effect on costs and selling prices) - Fashions and fads - Changes in material sciences - Stage of the business cycle (effect on