What Is PEST Analysis? Its Applications and Uses in Business

PEST analysis is a framework for evaluating the macro-environmental factors that affect a business. The acronym PEST stands for political, economic, social, and technological factors.

Political factors include government policies, regulations, and political stability. Economic factors include interest rates, inflation, and economic growth. Social factors include demographics, culture, and values. Technological factors include new technologies, product innovations, and changes in the way people communicate.

PEST analysis can be used to identify opportunities and threats for a business. For example, a new government policy that lowers interest rates could create an opportunity for a business to borrow money and expand. A change in demographics that results in an aging population could create a threat for a business that sells products to young people.

PEST analysis can also be used to develop strategies for a business. For example, a business that is facing a threat from a new technology could develop a strategy to invest in research and development to develop its own new technologies.

PEST analysis is a valuable tool for businesses of all sizes. It can help businesses to understand the external environment and make better decisions about their strategies.