PEST analysis

PEST analysisPEST is a tool used in the process of strategic definition, which allows us to analyze in great detail the present and future environment in which our company is located.

The environment of any company or organization is the set of factors that develop outside our company, external factors on which we have little or no ability to influence or manage them. Those companies or organizations that know, anticipate, adapt and act on the environment using it in their favor will improve their position in the market and will even lead it.

Thanks to the PEST we will better understand all the external factors which are intrinsically linked to the growth or decline of our sector.

PEST studies the environment under 4 clearly differentiated factors:

PEST is the acronym for each of these 4 factors (Political, Economic, Social, Technological)

Political factors

Under this dimension we have to analyze the impact of any politic-legal aspect that develops or has a prediction to develop and that directly influences our company or sector.

The stability of a government, the tax policy adopted by the next government after the elections, the existence of regulatory laws in the sector, the existence of subsidies, the type of labor policy implemented by the current government, the minimum and legal wage level, the existence of pressure groups, territorial instability due to independence issues ...

Economic factors

In this dimension we analyze all those economic factors that influence the activity of the company, in this dimension we analyze global economic indicators as well as those specific to the sector.

The evolution of inflation or price of products / services, the unemployment rate, interest rates, economic cycle (recession or expansion), levels of savings and debts, local currency price (devaluation or revaluation), economic trends.

Sociocultural factors

The sociocultural factors refer to all those social and cultural aspects of our clients that will affect the decision making of the acquisition of our products / services.

Number of inhabitants and potential clients, ethnic and cultural diversity, dominant religion, life expectancy, purchasing power of consumers, acceptance of ecological actions, educational level, degree of implantation of social trends such as collaborative economy, single-person households, immigration, recognition branded…

Technological factors

In this last dimension we analyze how present and future technologies influence or influence our business.

Existence of technologies and ease of access, forecasts of future technologies in the process of development, new materials, new production processes, new distribution channels, existence of specialized technological centers...

The influences of the environment will not have the same impact on all companies, not even those that belong to the same sector.

 

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