PEST analysis
Political, Economic, Social and Technological analysis describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.
Political factors: to what degree and how the government intervenes in the economy: tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability, goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided. Their impact on the health, education, and infrastructure of a nation.
Economic factors: economic growth, interest rates, exchange rates and the inflation rate. How businesses operate and make decisions? How it affects the costs of exporting goods and the supply and price of imported goods in an economy.
Social factors include the cultural aspects: health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. How they influence social needs and expectations? What is demanded/expected from the market, companies, economy and politics? Sample expectations: social security, labor rights, equality etc. Dilemmas of unethical expectations, such as for example, fascism, nationalism, social egoism. Dilemmas uneconomical expectations: an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Dilemmas of short and long run perspectives: example of population politics. Companies may change various management strategies to adapt to these social trends (such as recruiting older workers, promoting parenthood etc.)
Technological: include technological aspects: Research activity, basic research, applied projects, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors affect costs and quality of work, quality of products and live, innovations and competitiveness of local economies.
Optionally: legal, ethical and demographic factors
Political factors: to what degree and how the government intervenes in the economy: tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability, goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided. Their impact on the health, education, and infrastructure of a nation.
Economic factors: economic growth, interest rates, exchange rates and the inflation rate. How businesses operate and make decisions? How it affects the costs of exporting goods and the supply and price of imported goods in an economy.
Social factors include the cultural aspects: health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. How they influence social needs and expectations? What is demanded/expected from the market, companies, economy and politics? Sample expectations: social security, labor rights, equality etc. Dilemmas of unethical expectations, such as for example, fascism, nationalism, social egoism. Dilemmas uneconomical expectations: an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Dilemmas of short and long run perspectives: example of population politics. Companies may change various management strategies to adapt to these social trends (such as recruiting older workers, promoting parenthood etc.)
Technological: include technological aspects: Research activity, basic research, applied projects, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors affect costs and quality of work, quality of products and live, innovations and competitiveness of local economies.
Optionally: legal, ethical and demographic factors