What is PEST ANALYSIS?
It is a framework that strategy consultants use to scan the external micro-environment in which the firm operates. PEST is an acronym for the following factors:
1. Political
2. Economic
3. Social
4. Technological
PEST factors play an important role in the value creation opportunities of a strategy. However they are usually outside the control of the cooperation and must normally be considered as either threats or opportunities. The macro economical factors can differ per continent, country or even region, so normally PEST analysis should be performed per country.
In the table below you find the examples of each of these factors.
| Political(incl. Legal) | Economic | Social | Technological |
|---|---|---|---|
| Environmental regulations and protection | Economic Growth | Income distribution | Govt. Research spending |
| Tax policies | Interest rates & monetary policies | Demographics, population growth rates,Age distribution | Industry focus on technological effort |
| Internal trade regulations and restrictions | Govt. Spending | Labor/ social mobility | New inventions and development |
| Contract enforcement law Consumer protection | Unemployment policy | Life style changes | Rate of technology transfer |
| Employment laws | Taxation | Work/career & leisure attitudes, Entreprenuerial skills | Life cycle and speed of technological obsolescene |
| Govt. Organization/attitude | Exchange Rates | Education | Energy use and costs |
| Competition regulation | Inflation rates | Fashion, hypes | (Changes in) Information technology |
| Political Stability | Stage of business cycle | Health consciousness & welfare, feelings on safety | (Changes in) Internet |
| Safety regulations | Consumer Confidence | Living conditions | (Changes in) mobile technology |
VARIANTS OF PEST ANALYSIS
Sometimes extended forms are used SLEPT ANALYSIS or the STEEPLE ANALYSIS: Social/demographic, Technological, Economic, Environmental, Political, Legal and Ethnical factors. Also Geographical factors may be significant.
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~Vikas Chamarthi~
1 comments:
CORRECTION:
In the first line it is Macro-environment not micro...
It is a framework that strategy consultants use to scan the external macro-environment. error regretted.
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