top-rated free essay

Pest Analysis

Nov 05, 2008 535 Words
PEST analysis

PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macroenvironmental factors used in the environmental scanning component of strategic management. It is a part of the external analysis when conducting a strategic analysis or 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.

The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors. Contents

* 1 History
* 2 Overview
* 3 References
* 4 External links


According to the site RapidBI The term PEST was originally called the 'ETPS' and was quoted in Aguilar, Francis (1967). Scanning the Business Environment. New York: Macmillan.. , who discusses ‘ETPS’ - a mnemonic for the four sectors of what he calls his taxonomy of the business environment: Economic, Technical, Political, and Social. Sometime after this initial publication, Arnold Brown for the Institute of Life Insurance reorganized it as ‘STEP’ as a way to organise the results of his environmental scanning. Over time by academics and others in business it was modified yet again to become a so-called STEPE analysis (the Social, Technical, Economic, Political, and Ecological taxonomies).

In the 1980s, several other authors including Fahey, Narayanan, Morrison, Renfro, Boucher, Mecca and Porter included variations of the taxonomy classifications in a variety of orders: PEST, PESTLE, STEEPLE etc. Due to the negative connotations of PEST, a STEP analysis (re-ordering of the acronym letters) also exists, but is used to a lesser extent.

Some academics claim that STEP or PEST still contain headings which are appropriate for all situations and do not require additional elements, other claim that the additional breakdown of some factors to help individuals and teams undertaking an environmental scan.


It is also referred to as the STEER, STEEP, DESTEP, STEP, PESTE, PESTEL or PESTLE (or Political, Economic, Socio-cultural, Technological, Legal, 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. [2]


Aguilar, Francis (2006). Scanning the Business Environment. New York: Macmillan..

1. "Pestle Analysis Tool". RapidBI.
2. Armstrong. M. (2006). A handbook of Human Resource Management Practice, 10th, London: Kogan Page. ISBN 0-7494-4631-5.

Cite This Document

Related Documents

  • Blockbuster Business Analysis

    ...model seems to be obsolete, since the company could not keep up with the changes, almost closing the doors in 2010 when a bankruptcy process was open, the company struggles to reinvent itself, and regains its position in a reformed market. This Business Review and Analyze Report aims to present an overview of the rental movies industry, how the...

    Read More
  • Pest Analysis

    ...A LEVEL OF ACHIEVEMENT BUSINESS STUDIES A LEVEL RESOURCES. Issue 3 Sept 2004 Page 1 PEST Analysis A PEST analysis examines the Political, Economic, Social and Technological environments that affect industries and companies. (PEST analysis is also known STEP analysis). It is now recognised by marketing professionals that in the longer t...

    Read More
  • analysis of P&G

    ...information from Analysis of Procter & Gamble Company Description: The product Company Analysis is a highly comprehensive research analysis on the particular company and its competitors. A company analysis includes a complete and comprehensive analysis of the selected company, an overvie...

    Read More
  • PESTEL Analysis


    Read More
  • Pest Analysis

    ...PEST Analysis A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: * Political * Economic * Social * Technological The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macroenvironmental factors. A PEST...

    Read More
  • Pest Analysis

    ...An organisation’s success is influenced by factors operatingin it’s internal and external environment; an organisationcan increase it’s success by adopting strategies whichmanipulate these factors to it’s advantage. A successfulorganisation will not only understand existing factors butalso forecast change, so that it can take advantage o...

    Read More
  • Pest Analysis

    ...PEST ANALYSIS PESTLE stands for “Political, Economic, Social, Technological, Legal and Environmental” and is used for business and strategic planning, marketing planning, organizational change, business and product development and research reports. By understanding these external environments, organizations can maximize the opportunities...

    Read More
  • Strategic Analysis and Strategic Management

    ... Explain why strategic analysis is necessary in the process of developing an appropriate strategy. Identify tools that are available to examine the external environment and discuss how and why they are used. Introduction Strategy is a high level plan in which to achieve one or more goals under conditions of un...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.