PEST Analysis

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by jeniechoi

by jeniechoi

What is PEST Analysis?
∆PEST stands for Political, Economic, Social, and Technological

1. Political Factors
- are basically how the government interveness in the economy, governments have high impact on the health, education, and infrastructure of a nation.

▶Include government regulations and legal issues and define both formal and informal rules under which the firm operates.
▶Tax Policy
▶Employment laws
▶Environmental regulations
▶Trade restrictions and tariffs
▶Political stability

2. Economic Factors
- these factors greatly affect how businesses operate and make decisions

It influence the purchasing power of potential customers and the firm's cost capital
▶Economic growth
▶Internal rates
▶Exchange rates
▶Inflation rate

3. Social Factors
▶Include the demographic and cultural aspects of the external macro-environment.

These factors affect the customer needs and size of the potential market.
▶Health Consciousness
▶Population growth rate
▶Age distribution
▶Career attitudes
▶Emphasis on safety

4. Technological Factors
▶Can lower barriers to entry, reduce minimum efficient production levels and influence outsourcing decisions
▶R and O Activity
▶Automation
▶Technology Incentives
▶Rate of technological change