PEST Analysis: The Ultimate Guide to PEST Analysis

Companies, despite their industry factors and internal resources, need other micro-economic factors in order to thrive. There are factors that need careful analysis, such as product or service launches or new ventures.

Such factors determine how the success of a company or organization will be. PEST Analysis is one of the factors that are commonly used as tools to analyze and assess the external macro-economic factors.

What is PEST analysis?

The PEST analysis definition is a marketing concept which is used by companies, businesses, and organizations as a tool to track the environment they are operating in or where they are planning a new product/project or service launch. PEST Analysis, which stands for Political, Economic, Social and Technological Analysis, helps you analyze your business situation critically.

The tool helps you determine, in the long run, how these factors will affect the performance of your business. It is generally used in collaboration with other business analysis tools such as Porter's Five Forces and SWOT to better understand a situation as well as the related internal and external factors.

Political, economic, social, and technological factors affect your business all the time, but with PEST Analysis, you have an upper hand on these factors. And for PEST to be a success in your business, you need to understand the significance of each factor.

  • Political: Government stability, corruption, lobbying, political aims, employment laws, tax guidelines, political leanings, government subsidies and bilateral relationships are among the key factors to consider. PEST analyzes how legal factors as well as government regulations affect the business environment.
  • Economic: Companies and businesses get a chance to analyze the economic issues and how they will affect them. Factors such as interest rates, growth rates, consumer confidence, stock exchange, inflation rates, currency strength, debt access, unemployment levels and disposable income come into play.
  • Social: Elements such as the size of population, cultural values, marriages and divorces, wealth distribution, rates of birth and death, social classes, life expectancy, religion, risk attitudes, and education levels affect your business. With the abundance of societal knowledge, a business gets to understand what brings consumers to the market and how their needs are shaped.
  • Technology: Technology can affect your business either negatively or positively. Aspects such as block chain impact, connectivity access, technology adoption, internet infrastructure, automation and advances in communication must be understood.

How to use PEST analysis in business

Missing opportunities because you didn't know is a tragedy. Your company, business, or organization must have a plan in order to survive the tides of time. A thriving enterprise is a growing one. Thus, whether you are opening new shops or expanding a product line, you need critical analysis.

For a business to grow, it needs changes and changes need diligent planning. Whether you are a seasoned or new business owner, you need PEST analysis marketing in your business plan.

Change is unavoidable in business, be it economic, social, technological or political, and you must be prepared for any eventuality. With PEST you have the luxury of identifying and understanding significant changes in the business landscape, whether now or in the future.

You understand your business better when you critically analyze the influence of PEST factors in your business. You also get to know whether your next business move is strategic or stupid.

Political factors, for instance, are not only limited to elections, but also regulations about taxation, intellectual property, and wages.

On the other hand, technology keeps on advancing, and any business that is not paying attention to technology will likely go under. More apps and products are being built to harmonize and streamline business decisions. Artificial intelligence is on the rise and more opportunities lie in the future for those who will swim with the tides.


Lack of planning has brought down many businesses, but it doesn't have to be the case with you. Make it a point to be different and set your business in the path of success.

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