PEST Analysis
What Is a PEST Analysis Framework?
A PEST analysis framework is a tool used by businesses and researchers to assess the potential impact of external factors on the performance and success of a company or product. This framework is typically used to consider the political, economic, social, and technological environment an organization or industry operates in. It is useful for calculating the potential risks and opportunities, helping management make necessary changes to maximize growth and profitability.
🏛️ Political Factor
These factors are often legislative bills, regulations, and laws. You will experience them on a federal and national level. If you expand your business to several states, you must be aware of the laws in each location, respectively.
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📉 Economic Factor
These factors will affect monetary funds, sales, revenue, and profits. It’s rather straightforward. Consider these: taxes, recession, inflation rates…
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👨👩👧👦 Social Factor
These factors are more unpredictable than economic and political factors, because social factors influence your target market and people are unpredictable. Consider these: location, lifestyles, family size, ethnic background, health consciousness, culture and sub-cultures…
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💻 Technological Factor
If you run a tech-related business, this part of PEST analysis is particularly important. But even if you don’t, technology is in every business. Consider these: wireless, POS systems, cybersecurity, online databases, debit / credit machines, distribution and supply chains…
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