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PEST Analysis: Definition, Examples & Templates by Chad Brooks, BusinessNewsDaily Contributor | November 22, 2013 11:03am ET
In addition to the industry factors that can affect a company's performance, there are also a number of outside factors that play a role in how successful businesses can be. In order to determine how big a role those external factors play, many organizations conduct a PEST analysis. PEST is an acronym for political, economic, social and technological.
A PEST analysis looks at how those external factors can affect a business's activities and performance, and it can be used in combination with other tools, like Porter's five forces and a SWOT analysis, to determine an organization's overall outlook for success.
PEST factors
To get the most out of a PEST analysis, businesses must understand what each of the four factors is analyzing.
Political
This factor looks at how government regulations and legal issues affect a businesses chance to be profitable and successful. Issues that must be considered include tax guidelines, political stability, trade regulations, employment laws and safety regulations.
Economic
This factor examines the outside economic issues that can play a role in a company's success. Items that must be looked at include economic growth, exchange, inflation and interest rates, the current business cycle of the country where the company is located in and unemployment policies.
Social
This issue analyzes the demographic and cultural aspects that can help determine whether a business can compete in the current market. These factors help businesses examine consumer needs and what pushes them to make purchases. Among the items that should be examined are country demographics, population growth rates, age distribution, attitudes toward work, lifestyle changes, education and environmental and health consciousness.
Technological
This factor takes into consideration the technology issues that impact how an organization
In addition to the industry factors that can affect a company's performance, there are also a number of outside factors that play a role in how successful businesses can be. In order to determine how big a role those external factors play, many organizations conduct a PEST analysis. PEST is an acronym for political, economic, social and technological.
A PEST analysis looks at how those external factors can affect a business's activities and performance, and it can be used in combination with other tools, like Porter's five forces and a SWOT analysis, to determine an organization's overall outlook for success.
PEST factors
To get the most out of a PEST analysis, businesses must understand what each of the four factors is analyzing.
Political
This factor looks at how government regulations and legal issues affect a businesses chance to be profitable and successful. Issues that must be considered include tax guidelines, political stability, trade regulations, employment laws and safety regulations.
Economic
This factor examines the outside economic issues that can play a role in a company's success. Items that must be looked at include economic growth, exchange, inflation and interest rates, the current business cycle of the country where the company is located in and unemployment policies.
Social
This issue analyzes the demographic and cultural aspects that can help determine whether a business can compete in the current market. These factors help businesses examine consumer needs and what pushes them to make purchases. Among the items that should be examined are country demographics, population growth rates, age distribution, attitudes toward work, lifestyle changes, education and environmental and health consciousness.
Technological
This factor takes into consideration the technology issues that impact how an organization