What is a PEST analysis?

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PEST analysis is a strategic planning framework that identifies macro-environmental factors. Political, economic, social, and technological forces are all common factors in the environmental span of this procedure.

PEST analysis helps in finding effective solutions for prioritization, resource allocation, time & development roadmap planning, and creation of control mechanisms. You can use this analysis to determine potential threats and opportunities linked with any approach, as well as strategies to gain from them and prevent them.

For a much more comprehensive outcome, PEST Analysis can be combined with other types of strategic business analysis, like the SWOT analysis model which includes the strengths, weaknesses, opportunities, and threats of an entity. Comparing the results of these assessments can give a good foundation for making well-informed decisions.

Political factors determine how and to what extent the government gets involved in the economy. Government policy, trade restrictions, foreign trade policy, political stability/instability in foreign markets, labor legislation, tax policy, and environmental law are all examples of this.

Economic factors have such a big influence on how a company handles its operations and how profitable it is. Economic growth, inflation, exchange rates, interest rates, and consumer and business disposable income all examples of this.

The areas in which the population’s shared beliefs and attitudes are involved are referred to as social factors. Population increase, career preferences, health awareness, age distribution, and other factors are among them. These variables are particularly intriguing because they have a significant impact on how marketers perceive customers and what motivates them.

Technological factors influence both industry-specific and broad economic innovation. Being unaware of the most recent developments in a certain business can be immensely detrimental to operations. Research and development activity, technological incentives, automation, and the rate of technological development are all examples of technological factors.

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Pieter Borremans
By Pieter Borremans

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