PEST analysis is concerned with the key external environmental influences on a business.
The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarising the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
Political / Legal
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Economic
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Social
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Technological
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Environmental regulation and protection
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Economic growth (overall; by industry sector)
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Income distribution (change in distribution of disposable income;
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Government spending on research
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Taxation (corporate; consumer)
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Monetary policy (interest rates)
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Demographics (age structure of the population; gender; family size and composition; changing nature of occupations)
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Government and industry focus on technological effort
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International trade regulation
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Government spending (overall level; specific spending priorities)
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Labour / social mobility
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New discoveries and development
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Consumer protection
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Policy towards unemployment (minimum wage, unemployment benefits, grants)
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Lifestyle changes (e.g. Home working, single households)
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Speed of technology transfer
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Employment law
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Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates)
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Attitudes to work and leisure
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Rates of technological obsolescence
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Government organisation / attitude
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Exchange rates (effects on demand by overseas customers; effect on cost of imported components)
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Education
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Energy use and costs
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Competition regulation
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Inflation (effect on costs and selling prices)
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Fashions and fads
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Changes in material sciences
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Stage of the business cycle (effect on short-term business performance)
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Health & welfare
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Impact of changes in Information technology
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Economic "mood" - consumer confidence
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Living conditions (housing, amenities, pollution)
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Internet!
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