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PEST Analysis

Unlocking Business Success: Mastering PEST Analysis for Effective Environmental Scanning and Strategic Management

  • Post category:Run Business
  • Post published:December 15, 2022

PEST analysis is a tool for environmental scanning and a more precise part of strategic management. 

PEST analysis more work to describe the macro-environmental factors Originally developed in 1967 by Harvard professor Francis Aguilar

PEST analysis is much more effective for large-size businesses and tools are much more effective for the initial stage of business.

PEST analysis

PEST analysis is basically political, economic, social cultural, and technological scanning of business. 

Political factors

Political factors are directly related to the company’s business and changing political conditions affect the business practices like taxation policies, business policies, and regulations, safety and securities, and others.

Economic factors

Economic factors are very much affecting business practices like globalization, policies to protect the local manufacturer, export and import practices, credit policies, and others.

Companies are always concerned about the level of employment, labor rate, and educational conditions of particular states or regions.

Socio-cultural factors

Socio-cultural factors need to measure in the analysis of the external environment of business likes religions, languages, education, male and female ratio, cultures, and changing tastes and preferences of peoples of a particular area.

Technological factors 

Changing technology always affects the organization and it is essential for any organization to be more focused on the changing technology.

We are living in a world where technology is so dynamic that makes business more competitive and fast.

A well-known variation on the PEST Analysis method, more accurate in the U.K., is the PESTLE strategic scanning approach, which adds Legal and Environmental aspects.

Pestel Analysis

PEST analysis application 

PEST analysis application to know the political environment, economic environment, social and technological environment, and design future business plans that are more effective and productive in the market.

PEST analysis is a method of measuring the external factors that could impact the profitability of the company.

Benefits for business 

PEST analysis is essential for business external environment analysis and helps in strategy formulation and market analysis. 

PEST analysis facilitates an understanding of the significant business environment and develops external strategic thinking.

PEST analysis empowers the business to take action to reduce the threats and make the company proactive. 

It works as a scanner which is useful in scanning the overall external environment and gives the details of the information that are very much useful in the company’s future business operation and strategy formulation.

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