Company PEST Analysis
History and Use
PEST is a type of analysis used in strategic management which takes into account Political, Economic, Social and Technological (PEST) factors. The term "PEST" was first coined by Francis Aguilar in his 1967 book, "Scanning the Business Environment." The analysis also often includes Legal and Environmental factors, thus creating a PESTEL analysis. The "EL" was added by Liam Fahey and V.K. Narayanan in their book, "Macro-environmental Analysis in Strategic Management," published in 1986.Frequently combined with Michael E. Porter's Five Forces Model and Albert Humphrey's SWOT analysis, PESTLE analysis is a useful tool for understanding market demand/decline, current business positions and potential opportunities/obstacles. The factors it analyzes should not be considered solely at the company level. Rather, these external factors must be examined at a company, national and global level.
Political Factors
A business could flourish under one political entity, and be run out of business by another; as in additional taxes, regulations, or bans.
This can be seen as the degree by which government legislation impacts the company. Some examples include tax policy, trade restrictions and tariffs. Less obvious examples include inter-country relationships, political trends, types of government, war, terrorism, treaties and currency.
Economic Factors
While closely related to political factors, the economic factors analyzed by PESTEL analysis focus more on the monetary impact created thereby. Examples include exchange rates, interest rates, inflation, import/export levels, consumer confidence, capital markets and job growth rates.
Social Factors
The social factors considered (also called socio-cultural factors) refer to those factors that result from society's changing tastes, preferences and demands. Examples include disposable income,