What is PEST Analysis Definition, Factors & Examples

Fri, 03/28/2014 - 23:27 -- Gulzar Ahmed

What is PEST Analysis & Why Do It

The environment of corporate world is ever changing. No business operates in a vacuum environment.  The corporate environment is something real complex and dynamic. There are several external factors surrounding a business and influencing it strategy and activities. The external environment of a company is called macro-environment. So every successful company need to deeply analyze and understand all macro-environmental forces in order to achieve the defined goals and objective as well as for the smooth running of a business. For this purpose company did PEST analysis.

Definition of PEST

PEST Analysis is abbreviation of “Political, Economic, Social, & Technological analysis" and it allows companies to make a framework of macro-environmental factors for the purpose of designing effective environmental strategies.

pest analysis factors and important in management

4 Factors of PEST Analysis with Examples

The forces or factors of PEST analysis with examples

Political Factors

The political factors which influence the external company environment includes consumer protection laws, employment laws & regulations, competition regulations, environmental regulations and government taxes etc. so every business needs to operate around these forces.

Example: Reduction in import duty of floor tiles for ceramic industry can have two types of impacts. It will be positive to the local ceramic manufacturer as imported tiles are more costly. However, it will leave negative impact to importers.

Some major examples of political factors are:

  1. Taxation policy
  2. Employment laws
  3. Tariffs & Trade restriction
  4. Political stability or instability in operating country and
  5. Environmental laws

Economic Factors

Economic factors also influence the external environment of a particular company. It affects the purchasing power of potential customer as well as company’s cost of capital.


Related pages


bcg growth share matrix company examplewhat is stp strategypull factors of urban areaswhats command economywhat is meant by encoderimplications of classical conditioningni economics definitioncharacteristics of capitalist economic systemfactors influencing demand in economicsadvantages of laissez fairelewins 3 step modelsigmund freud theory personalitypros of a command economystructured interviews advantages and disadvantagesguiding principles of community organizingdeterminants of organization structureopen system of social stratificationdiscriminate meaning in tamilvertical and horizontal integration hrmsenate upper chamberlok sabha english namecapitalism strengthsaristotophases of trade cycle in economicsmicro marketing definitionexample of accidental samplingwhat is cultural lag and examplesintegrations definitionthe production concept holds thatplato republic educationsocialization in sociology definitionbuying behavior examplesdiseconomies of scale means thatmajor pricing strategies in marketingoperant condition definitionstp process marketingadam smith critiquewhat are the 4ps of marketing mixrobbins definition of economicsmeaning of advantage in hindimeaning of sole proprietorinstructional aids in educationdefine maturation in child developmentsocrates contribution to educationexamples of editorial essaysmerits of microeconomicswhat is the meaning of sole proprietorshiphobbesian social contractdevelopmental and personality theories of sigmund freudetymological definition of sociologyadvantages and disadvantages of third generation computersdescribe how organizations manage diversity effectivelymeaning of hrm pdfmigration definition sociologyrecessionary and inflationary gapsuperego id ego examplesmeaning of urbanisation in hindiactualising tendency carl rogersmeaning of socialism in hindiexternal marketing environment factorsimc tools marketinginsent familyfreud developmental theorymeaning of conceptual in hindidisadvantages of problem solving methodmain features of federalismappearance discrimination in the workplacesingle proprietorship advantages and disadvantagestypes of democraciesselling concept in marketing managementqualities of businessmanorganizational behavior lecture noteswhat is the concept of scarcity in economicsdefine psychosexual developmentdefine hypothesizebarter exchange systemstatistical quality control lecture notes