Meaning of PEST analysis

What is PEST analysis?

PEST analysis is a macro environment analysis method proposed by management scholar

Philip Kotler

, which analyzes the following factors: Politics, Economy, Society, and Technology. The acronym PEST analysis is based on the analysis of four environmental factors.

Specific examples of each environmental factor include:

Political factors: Trends in laws, ordinances, regulations, public support, etc.Economic factors: Trends in the economy, economic growth, prices, etc.Social factors: Trends in demographics, lifestyles, consumer awareness, etc.Technical factors: Products Technology trends in development, production, or

marketing

It is difficult to change the macro environment such as politics, economy, society, technology, etc. by your own efforts. By using PEST analysis, you can properly understand the fluid macro environment and plan more effective

marketing strategies

.

PEST analysis steps and points

PEST analysis involves four steps:

1. Information gathering


First of all, we collect information and collect accurate information from a wide perspective.

2. Classification into four PEST factors

<br/> Next, classify the collected information into four factors: political, economic, social, and technological.

3. Categorize the classified information into “opportunities” and “risks”


The information classified into four factors is further divided into “opportunities” that bring business opportunities to your company, and “risks” that bring your company into a business crisis.

4. Set priorities based on urgency and importance

. By evaluating the urgency and importance of each piece of information based on opportunity and risk, you can set priorities in order of the greatest impact on your company. Masu.

By performing PEST analysis using the steps above, you will be able to formulate strategies without overlooking changes in the macro environment and take concrete actions.

Reference article

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