What is a PEST Analysis?

August 5, 2018 Hansie Britz

                              

 

PEST is an acronym for:

P – Political;

E – Economic;

S – Social; and

T – Technological.

All external factors that commonly effect business activities and performance.

PEST Factors

Political – Government regulations and legal issues affect a company’s ability to be profitable and successful and this factor looks at how that can happen.

Economic – This factor examines thee outside economic issues that can play a role in a company’s success. Items to consider include inflation, interest rates, economic growth, unemployment etc.

Social – The Social factor analyzes the demographic and cultural aspects of the company’s market. Items to consider include demographics, population growth, age distribution etc.

Technological – Technology issues affect how an organization delivers its product or service to the marketplace. Items to consider include current technology, role of the internet, technology changes etc.

PEST Limitations

A PEST Analysis scans only the external environment while the internal environment is completely ignored. For the PEST Analysis to be worthwhile it should be used in conjunction with a SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats.

Why is a PEST Analysis important?

Because these can influence marketing and relationships that a company has worked hard to develop. Knowing ahead of time that a change may occurring will help making better business decisions.

A PEST Analysis guides us to identify effective strategies for setting priorities, allocating resources, planning for time and development roadmap, and formulating control mechanisms. With this analysis, a business owner can identify potential opportunities and threats associated with their strategies and figure out ways to take advantage of them and/or avoid them totally.

DO YOU NEED ANY HELP WITH A PROFESSIONAL PEST ANALYSIS CONTACT US NOW AT – (27) 84 583 3143 OR money@global.co.za