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A Little Background
PEST analysis is a methodology that classifies effects of environment as political, economic, social, and technological features. A study of the PEST analysis method and examples related to this technique is beneficial for the growth of any organization. Often the factors of legal and environment are included to modify the term to PESTLE analysis. PEST analysis considers the influence of these factors on the business. The results of this analysis are useful for obtaining the benefit of opportunities, and consequently prepare contingency plans for the imminent threats. PEST analysis is considered to be a valuable strategic method to anticipate the market decline or growth, business status, potential for improvement, and develop future operational strategy. PEST analysis ensures that the organization functioning is in accordance with the dominant influential change forces that may affect the environment of business. PEST is especially beneficial when an organization plans to enter new markets or other countries. The utilization PEST analysis assists to efficiently adjust to new environments.
Political: Politics has a significant impact on the control of business, and the consumer capability of expenditures. The
Political stability in the environment Influence of government policies that control the business. Government directions regarding market ethics, and consumer protection. Government economic policies. Influence of government on religion and culture. Involvement of government in trade agreements. Laws of employment.
Economic: Market analytics should examine the short and long term state of the business. This is particularly important while forecasting international markets. The following are important to consider:
Production level. Social: The social factors influence the business at various levels, and need to be carefully examined. These factors are:
Per capita income. Gross Domestic Product (GDP) Economic progress trend. Rate of exchange Consumer confidence and its affect on aggregate demand
Leading religion. Attitude towards foreign goods and services. Influence of language on use of products in the markets. Time available with the consumers for leisure. Role of women and men in the society. Opinion of people on green issues. Demographics of the population. Lifestyle, education, health, fashion trends, earning capacity
Technology: Technology is commonly identified as an essential element of the organization since it is a useful tool for the attainment of market advantage. Technology can be used, and this is affected by government support. Technological advancement can produce new industries, and also provides valuable input to service and manufacturing industries. The following are important features in this regard:
Does technology permit the manufacture of products at economical rates, without compromising quality? Do the technologies present original products, like mobile telephone, internet banking, the purchase of books through internet, etc. Modern communication channels, like Customer Relationship Management, banners, etc.
References
"PEST analysis." Guide on How to Write University Essays and Dissertations. http://universityessays.tripod.com/pest_pestel_pestle_lepest_analysis.html (accessed December 24, 2010). "PEST Analysis." Marketing Teacher. http://marketingteacher.com/lesson-store/lesson-pest.html (accessed December 24, 2010). "PEST Analysis." NetMBA Business Knowledge Center. http://www.netmba.com/strategy/pest/ (accessed December 24, 2010).