Study notes

What is PEST analysis

PEST analysis is concerned with the key external environmental influences on a business. The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. Here, we list some possible factors that could indicate important environmental influences for a business under the PEST headings.

Political / Legal




Environmental regulation and protection

Economic growth (overall; by industry sector)

Income distribution (change in distribution of disposable income;

Government spending on research

Taxation (corporate; consumer)

Monetary policy (interest rates)

Demographics (age structure of the population; gender; family size and composition; changing nature of occupations)

Government and industry focus on technological effort

International trade regulation

Government spending (overall level; specific spending priorities)

Labour / social mobility

New discoveries and development

Consumer protection

Policy towards unemployment (minimum wage, unemployment benefits, grants)

Lifestyle changes (e.g. Home working, single households)

Speed of technology transfer

Employment law

Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates)

Attitudes to work and leisure

Rates of technological obsolescence

Government organisation / attitude

Exchange rates (effects on demand by overseas customers; effect on cost of imported components)


Energy use and costs

Competition regulation

Inflation (effect on costs and selling prices)

Fashions and fads

Changes in material sciences

Stage of the business cycle (effect on short-term business performance)

Health & welfare

Impact of changes in Information technology

Economic "mood" - consumer confidence

Living conditions (housing, amenities, pollution)


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