The acronym stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business.
Identifying PEST influences is a useful way of summarising the external environment in which a business operates. However, it must be followed up by consideration of how a business should respond to these influences.
The table below lists some possible factors that could indicate important environmental influences for a business under the PEST headings:
Political / Legal | Economic | Social | Technological |
- 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) | - Education | - 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) | - Internet! |
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