Documente Academic
Documente Profesional
Documente Cultură
Contents: 1. Definition 2.What is PEST analysis? 2.1 PEST variations 3.How to do PEST analysis? 3.1Gathering PEST information 3.2 Identifying opportunities and threats 3.3 PEST analysis example
Definition
1. PEST analysis an analysis of the political, economic, social and technological factors in the external environment of an organization, which can affect its activities and performance.
[1]
2. PESTEL model a framework that categorizes and analyzes an important set of external forces (political, economic, technological, socio-cultural, ecological, and legal) that might affect a firm.
[2]
PEST analysisis also done to assess the potential of a new market. The general rule is that the more negative forces are affecting that market the harder it is to do business in it. The difficulties that will have to be dealt with significantly reduce profit potential and the firm can simply decide not to engage in any activity in that market.
PEST variations
PEST analysis is the most general version of all PEST variations created. It is a very dynamic tool as new components can be easily added to it in order to focus on one or another critical force affecting the company. Although following variations are more detailed analysis than simple PEST, the additional components are just the extensions of the same PEST factors. The analysis probably has more variations than any other strategy tool:
STEP = PEST in more positive approach. PESTEL = PEST + Environmental + Legal PESTELI = PESTEL + Industry analysis STEEP = PEST + Ethical SLEPT = PEST + Legal STEEPLE = PEST +Environmental + Legal + Ethical STEEPLED = STEEPLE + Demographic PESTLIED = PEST + Legal + International + Environmental + Demographic
Step 1. Gathering information about political, economic, social and technological changes + any other factor(s). Step 2. Identifying which of the PEST factors represent opportunities or threats.
Economic
Socio-Cultural
Health consciousness Education level Attitudes toward imported goods and services Attitudes toward work, leisure, career and retirement Attitudes toward customer service product quality and
Technological
Basic infrastructure level Rate of technological change Spending on research & development Technology incentives Legislation regarding technology Technology level in your industry Communication infrastructure Access to newest technology Internet infrastructure and penetration
Attitudes toward saving and investing Emphasis on safety Lifestyles Buying habits Religion and beliefs Attitudes toward green or ecological products Attitudes toward and support for renewable energy Population growth rate Immigration and emigration rates Age distribution and life expectancy rates Sex distribution Average disposable income level Social classes Family size and structure Minorities
Environmental (ecological)
Weather Climate change Laws regulating environment pollution Air and water pollution Recycling Waste management
Legal
Anti-trust law Discrimination law Copyright, patents / Intellectual property law Consumer protection and e-commerce Employment law
Attitudes toward green or ecological products Endangered species Attitudes toward and support for renewable energy
Ethical
Ethical advertising and sales practices Accepted accounting, management and marketing standards Attitude towards breaking patents counterfeiting and
Demographic
Population growth rate Immigration and emigration rates Age distribution and life expectancy rates Sex distribution Average disposable income level Social classes Family size and structure Minorities
Ethical recruiting practices and employment standards (not using children to produce goods)
Economic
1. GDP will grow by 3% in 2013 2. Availability of credit for businesses will slightly grow or remain unchanged in 2013. The same applies for the cost of credit in the 1 half of the year 3. Unemployment is expected to decrease to 7% 4. Inflation will fall to 3% or 2% in 2013. 5. Corporate tax rate will decrease by 2% next year to 23% 6. Dollar exchange rates are expected to decrease compared to euro 7. Disposable income level will decrease. 8. Metal and oil prices will increase by 5% and 6% respectively in 2013
Socio-Cultural
1. Positive attitude towards green vehicles 2. Number of individuals and companies buying through the Internet is 67% and 45% respectively and is expected to grow 3. Immigration is increasing 4. Increasing attitude toward jobs with shorter work hours 5. People tend to buy more domestic rather than foreign products 6. People change their eating habits and now tend to eat healthier food. 1. New
Technological
machinery that could reduce production costs by 20% is in development. 2. Countrys major telecom company announced its plans to expand its internet infrastructure and install new optic fiber cables. 3. Driverless cars may be introduced in the near future. 4. New type of table will be introduced into the market next year.