PEST analysis is a strategic framework used by organizations to assess and analyze the external macro-environmental factors that can impact their business. The acronym stands for Political, Economic, Social, and Technological factors. PEST analysis involves identifying and evaluating these four categories of factors to gain insights into potential opportunities and threats in the market. It helps businesses adapt their strategies and make informed decisions based on the prevailing political climate, economic conditions, societal trends, and technological advancements.

1. MODULE 2:
MACROENVIRONMENT:
PEST ANALYSIS
STRATEGIC
MANAGEMENT
DR. EMMANUEL DOTONG
Associate Professor of Business
ejdotong@alum.up.edu.ph
STRATEGIC TOOLS AND MODELS

2. Module
Coverage
01
02
Business Macroenvironment
PEST ANALYSIS
MODULE 2:
PESTLE ANALYSIS
03 PEST ANALYSIS APPLICATION

3. 01
BUSINESS MACROENVIRONMENT
Definition and Factors

4. BUSINESS
MACROENVIRONMENT
The macroenvironment refers to the
broader external factors and conditions
beyond a company's immediate control that
influence its operations, strategies, and
overall business environment. These factors
include economic, political, social,
technological, legal, and environmental
elements that collectively shape the context
in which an organization operates.
POLITICAL
ENVIRONMENT
ECONOMIC
SOCIAL
TECHNOLOGICAL
ENVIRONMENT
ENVIRONMENT
ENVIRONMENT

5. 02
PEST ANALYSIS
Purpose and Factors

6. PEST ANALYSIS
PEST
ENVIRONMENT
ECONOMICAL FACTORS
Involve the financial conditions and
trends that affect businesses, including
aspects like growth rates, inflation, and
consumer spending patterns.
TECHNOLOGICAL FACTORS
Encompass the advancements and innovations in
technology that impact industries, influencing
business strategies and operations.
POLITICAL AND LEGAL FACTORS
Encompass the governmental and regulatory
influences that impact business operations
and decisions within a specific region or
country.
SOCIAL FACTORS
Encompass the cultural, demographic, and
societal influences that affect consumer behavior
and shape market trends.
MACROENVIRONMENT FACTORS

7. MACROENVIRONMENT
§ PEST analysis serves as a valuable strategic
framework, systematically assessing the impact of
external macro-environmental elements on
businesses or industries.
§ By scrutinizing Political, Economic, Social, and
Technological factors, it empowers organizations
with a comprehensive understanding of the larger
context in which they operate. This informed
perspective aids decision-making and facilitates
strategic planning by highlighting potential
challenges, opportunities, and changes influenced
by these factors.
§ PEST analysis equips businesses to proactively
adapt, capitalize on emerging trends, and mitigate
risks associated with their operating environment.
PEST ANALYSIS

8. POLITICAL AND LEGAL FACTORS
PEST ANALYSIS
§ Government Grants And Incentives
§ Changes In Government Leadership
§ Corruption Levels And Transparency
§ Government – Business Partnerships
§ Intellectual Property Enforcement
§ National Security And Defense Policies
§ Local And National Election
§ War And Terrorism
§ Campaign Finance Regulations
§ Trade Sanctions And Embargoes
§ Immigration And Work Permit Regulations
§ Cybersecurity Laws And Regulations
§ Land Use And Zoning Regulations
§ E-commerce Business Regulations
§ Discrimination Regulations
§ Employment Laws & Regulations
§ Contract & Commercial Law
§ Intellectual Property Rights
§ Health & Safety Regulations
§ Data Protection & Privacy Laws
§ Competition Laws & Antitrust
§ Consumer Protection Laws
§ Environmental Regulations
§ Import & Export Regulations
§ Licensing & Accreditation Permits
§ Diversity Regulations
§ Tax Laws & Regulations
§ Product Liability & Quality Standards
§ International Trade Laws & Treaties
§ Employee Rights And Labor Laws

9. ECONOMIC FACTORS
§ Foreign direct investment inflows and outflows
§ Government budget deficit or surplus
§ Public debt-to-GDP ratio
§ Private sector credit growth
§ Stock market indices and trends
§ Bond market yields and trends
§ Interest rates (short-term and long-term)
§ Real estate market trends
§ Exchange rate trends and volatility
§ Sovereign credit rating
§ Investment rate
§ Manufacturing output and capacity utilization
§ Retail sales growth
§ Industrial production growth
§ Balance of trade and balance of payments
§ Capital expenditure trends
§ GDP growth rate
§ Inflation rate
§ Consumer Price Index (CPI)
§ Producer Price Index (PPI)
§ Unemployment rate
§ Labor force participation rate
§ Employment-to-population ratio
§ Wage growth rate
§ Productivity growth rate
§ Central bank policy rates
§ Money supply
§ Commodity prices
§ Savings rate
§ Consumer confidence index
§ Business sentiment index
§ Export and import growth rates
PEST ANALYSIS

10. SOCIAL FACTORS
§ Demographic lifestyles
§ Cultural diversity and multiculturalism
§ Urbanization and rural migration
§ Consumer attitudes towards sustainability
§ Health and wellness trends
§ Educational attainment and literacy rates
§ Lifestyle preferences and leisure activities
§ Traditions and customs
§ Attitudes towards work-life balance.
§ Aging population and retirement trends.
§ Changing gender roles and equality.
§ Social values and ethical considerations
§ Adoption of new social norms
§ Buying habits
§ Impact of social media on consumer behavior
§ Cultural values and norms
§ Social media and digital communication trends
§ Cultural perceptions of products and brands
§ Attitudes towards entrepreneurship
§ Attitude Towards Eco-friendly Products
§ Age distribution and generational preferences
§ Cultural integration in global markets
§ Cultural influences on consumer behavior
§ Cultural taboos and sensitivities
§ Cross-cultural communication challenges
§ Age distribution by cohorts
§ Birth rates and fertility rates
§ Death rates and life expectancy
§ Population density and urbanization rates
§ Ethnic and racial composition
§ Educational levels and enrollment rates
PEST ANALYSIS

11. § Rate of Technological Change
§ Disruptive Technologies
§ Research and Development (R&D) Funding
§ Innovation Ecosystem
§ Intellectual Property Protection
§ Digital Transformation
§ Technology Transfer
§ Open-Source Collaboration
§ Automation Potential
§ Technological Infrastructure
§ Technological Convergence
§ Skills Gap & Industry 4.0
§ Biotechnology Advancements
§ Nanotechnology Potential
§ Quantum Computing and Genetic Engineering
§ Renewable Energy Innovations
§ Space Technology
§ Augmented and Virtual Reality
§ Cybersecurity Advancements
§ Internet of Things (IoT) Growth
§ 5G and Connectivity Expansion
§ Artificial Intelligence (AI) Progress
§ Machine Learning Applications
§ Big Data Analytics
§ Cloud & Cognitive Computing Adoption
§ Blockchain Technology
§ Autonomous Vehicles Development
§ Sustainable Technology Solutions
§ Health Tech Innovations
§ E-commerce Innovations
§ Robotics Advancements
§ Smart Cities Initiatives
§ Wearable Technology Trends
§ Clean Energy Technologies
§ Virtual Healthcare Services
§ Educational Technology (EdTech)
TECHNOLOGICAL FACTORS
PEST ANALYSIS

12. 03
PEST ANALYSIS APPLICATION
Instructions and Analysis

13. PEST ANALYSIS
APPLICATION
Examines Political, Economic, Social, and Technological factors to identify opportunities and threats,
providing valuable insights for informed decision-making and planning.
01
02
03
IDENTIFY EXTERNAL
FACTORS
ANALYZE THE BUSINESS
IMPLICATION
DEFINE SCOPE
AND PURPOSE
Determine whether the analysis is focused on a specific project, business, industry,
or market. This clarifies the context for which the analysis is being conducted.
Recognize the primary external influences that impact the industry your company belongs: Political, Economic, Social, and
Technological (PEST) factors. These factors collectively shape the broader context within which the subject operates.
Evaluate the impact of each identified factor. Understand how political, economic, social, and technological forces can
influence operations, opportunities, and challenges. Translate these insights into actionable strategies to guide decision-
making and planning.

14. PEST ANALYSIS
E1 Minimum Wage Increase
E2 High Inflation Rate
E3 Increase in Supply Chain Cost
ECONOMIC FACTORS
T1 Social Media Trends
T2 Online Reservation Systems
T3 New Smart Kitchen Technologies
TECHNOLOGICAL FACTORS
P1 Revised Public Establishments Smoking Policy
P2 Revised Tax Policies for Alcoholic Beverages
P3 Active Public Health Campaigns
POLITICAL FACTORS
S1 Health and Wellness Trends
S2 Consumer’s Digital Dependence
S3 Active Cultural Events and Holidays
SOCIAL FACTORS
MACROENVIRONMENT FACTORS

15. A
NA
L
Y
S
I
S
P
E
S
T
P1 Revised Public Establishments Smoking Policy
All indoor public establishments, including restaurants, bars, and entertainment venues, are now
required to be smoke-free environments. This change aligns with growing health awareness trends and
aims to provide clean and safe spaces for patrons and employees (De la Cruz, 2023)
E1 Minimum Wage Increase
The Philippines has announced a 20-peso increase in the minimum wage in Metro Manila to address rising
living costs and enhance worker compensation, aiming to improve their quality of life. While this move
positively impacts workers, businesses may need to navigate higher labor costs and potential shifts in
consumer spending (Dotong, 2023).
S1 Health and Wellness Trends
The landscape of health and wellness is in constant flux, influenced by shifting consumer choices,
technological progress, and a heightened focus on overall well-being. This is evident in trends like the rise
of plant-centric diets, tailored nutrition plans, the surge in non-alcoholic consumption, and the demand
for clear nutritional information (Jimenez, 2023).
T1 New Smart Kitchen Technologies
Smart kitchen technologies are transforming the operations of restaurants and bars, improving efficiency,
customer experiences, and safety. These include Kitchen Management Systems, Smart Kitchen
Appliances, Temperature and Monitoring Sensors, Kitchen Display Systems (KDS), Digital Recipe
Management, Voice-Activated Assistants, Smart Dishwashers, Allergen and Dietary Preference
Management, and Waste Management Solutions, and others (Ocampo, 2023)

16. P1 BUSINESS IMPLICATIONS
If a significant portion of regular patrons are smokers, the
policy change might lead to a temporary drop in revenue
during the adjustment period.
Initial Revenue Dip
Inadequate implementation might result in legal
consequences, fines, or damage to the reputation of the
company.
Regulatory Compliance
Some patrons might perceive the policy as restrictive,
affecting the company’s traditional image and appeal.
Change in Public Perception
Implementing the policy requires training staff, adjusting
outdoor areas, and enforcing new rules, which could strain
resources.
Resource Allocation
Enforcing a smoke-free policy aligns with health trends,
portraying the establishment as a responsible and
health-conscious establishment.
Health-Conscious Image
A smoke-free environment attracts non-smokers,
families, and health-conscious individuals, potentially
increasing foot traffic and revenue.
Broader Customer Base
Providing a smoke-free workplace enhances the
health and job satisfaction of employees, contributing
to a positive work environment.
Improved Employee Well-being
Smoke-free air improves the overall dining and socializing
experience, making the establishment more appealing to a
wider audience.
Enhanced Customer Experience
Business
Implications
Revised Public Establishments
Smoking Policy
Adaptation and strategic planning can help bars
successfully navigate these changes and create healthier
and more welcoming environments for their patrons.
Political Factor Evaluation

17. E1 BUSINESS IMPLICATIONS
Higher wages lead to increased labor expenses, potentially
impacting the establishment’s profitability.
Increased Labor Costs
Rising labor costs might necessitate price hikes on menu
items, potentially deterring price-sensitive customers.
Repricing Pressure
If competitors don't match the wage increase, the
establishment might face challenges in retaining and
attracting staff.
Competitive Challenges
Smaller establishments with limited financial flexibility might
struggle to accommodate sudden wage increases.
Budget Constraints
Higher wages can boost employee morale, leading to
increased job satisfaction, engagement, and lower
turnover rates.
Improved Employee Morale
Employees earning more can lead to increased
disposable income, potentially boosting patronage to
the establishment.
Consumer Spending Boost
Motivated and satisfied employees may provide better
customer service, resulting in improved dining
experiences.
Enhanced Quality of Work
Demonstrating commitment to fair wages can enhance the
establishment’s reputation, attracting socially conscious
customers.
Positive Public Image
Business
Implications
Minimum Wage Increase
Careful planning, considering the establishment’s financial
health and customer base, can help mitigate potential
negatives and leverage the positives for overall business
success.
Economic Factor Evaluation

18. T1 BUSINESS IMPLICATIONS
Acquiring and implementing smart kitchen technologies can
be costly, potentially straining budgets
High Initial Investment
Staff requires training to operate and troubleshoot the
technology effectively, leading to additional time and effort.
Training Requirements
Malfunctions or technical glitches might disrupt
operations and lead to customer dissatisfaction.
Technical Issues
Automation could lead to concerns about job displacement
among staff responsible for manual tasks.
Job Displacement Concerns
Smart kitchen technologies streamline operations,
reducing preparation time and improving overall
efficiency.
Enhanced Efficiency
Automation and streamlined processes might lead to
lower labor requirements, positively impacting costs.
Reduced Labor Costs
Faster service, accurate orders, and consistent quality
contribute to an improved dining experience.
Enhanced Customer Experience
Smart technologies encourage experimentation with new
cooking techniques and menu items.
Innovation Opportunities
Business
Implications
New Smart Kitchen Technologies
Navigating the adoption of smart kitchen technologies requires careful
assessment of benefits and drawbacks. Proper planning, staff training, and
contingency measures can help maximize the positive impacts while mitigating
potential challenges.
Technological Factor
Evaluation

19. END Thank you for Listening!
ASSOC. PROF. EMMANUEL DOTONG
Management Consultant
ejdotong@alum.up.edu.ph