Introduction to Pest Analysis

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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 / LegalEconomicSocialTechnological

- 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 short-term...
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