PEST Analysis

PEST Analysis Concept

PEST Analysis is a model of the organizations’ macro-environmental external surroundings analysis, which acronym corresponds to the initials of the four groups of factors or environmental variables to be analyzed, namely:

  • Political-Legal Variables: governmental stability, legislation and markets’ regulation, tax policy, labor legislation …
  • Economic Variables: product evolution, tax rate, inflation rate, unemployment level, salary levels, energy costs and other productive factors …
  • Socio-cultural variables: demographic tendencies, consumption habits, lifestyles, income distribution, educational system…
  • Technological Variables: public and private investments in I&D, patents protection, speed of the technology transfer…

Each one of the presented variables is characterized for being out of the company’s direct control, being able, however, to represent threats or opportunities that the organization should seek to avoid or take advantage of.

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