PEST Analysis

A PEST analysis is a study of various macro-environmental factors within a country and they are performed by businesses when they are undertaking strategic planning. During this type of analysis the political, economical, social and technological areas of a society will be looked at in more detail. So how can a PEST analysis be completed?

One popular way of completing a PEST analysis is to use a large sheet of paper and on this write the one of the words – political, economic, social and technological in each corner. These are the factors that the analysis will be looking at in more detail.

Underneath each of these headings every factor that could impact on a business should be written down. It is important to think literally and lastly during this part of the process as there can often be some surprising factors that could have an impact on a business in the future.

Next you need to think of how many of these factors have interrelationships. For instance as the internet (technological) becomes more and more popular there are now more people who buy online (social) this also impact on how much people are willing to spend on various products (economic).

When you have done this you need to look at all the factors that are interrelated and connect them together. The areas that have the most connections are the ones that will have a greater chance of impacting on your business in the future. These need to be thought of when you are undertaking strategic planning for a business.

Finally you will need to use what you have found from your investigations. This can include creating contingency plans for any of the potential threats and been identified or changing your target customers if one area is experiencing rapid growth.