The document discusses PEST analysis, a tool that analyzes the political, economic, sociocultural, and technological factors of the external business environment. It explains each of the PEST factors and provides examples of aspects to consider under each one such as regulations, economic conditions, cultural trends, and technological advances. The document also outlines how to use PEST analysis by brainstorming factors, opportunities, threats, and then taking action. PEST analysis helps businesses identify opportunities and threats, anticipate changes, avoid projects likely to fail, and develop objective views of new markets.

1. PESTPEST

2. What is PEST ?What is PEST ?
A simple and widelyA simple and widely
tool that helps youtool that helps you
analyze youranalyze your
business.business.

4. Political FactorsPolitical Factors
Political factors includePolitical factors include
government regulations andgovernment regulations and
legal issues and define bothlegal issues and define both
formal and informal rulesformal and informal rules
under which the firm mustunder which the firm must
operate.operate.

5. Economic FactorsEconomic Factors
Economic factors affect theEconomic factors affect the
purchasing power ofpurchasing power of
potential customers andpotential customers and
the firm's cost of capital.the firm's cost of capital.

6. Sociocultural FactorsSociocultural Factors
Social include theSocial include the
demographic and culturaldemographic and cultural
aspects of the externalaspects of the external
macroenvironment. Thesemacroenvironment. These
factors affect customerfactors affect customer
needs and the size potentialneeds and the size potential
markets.markets.

7. Technological FactorsTechnological Factors
Technology is vital forTechnology is vital for
competitive advantage,competitive advantage,
and is a major driver ofand is a major driver of
globalization.globalization.

8. SUMMARYSUMMARY
Political (incl.
Legal)
Economic Sociocultural Technologic
al
Environmental regulations
and protection
Economic growth Income distribution Government research
spending
Tax policies Interest rates &
monetary policies
Demographics,
Population growth rates,
Age distribution
Industry focus on
technological effort
International trade
regulations and restrictions
Government spending Labor / social mobility New inventions and
development
Contract enforcement law
Consumer protection
Unemployment policy Lifestyle changes Rate of technology
transfer
Employment laws Taxation Work/career and leisure
attitudes
Entrepreneurial spirit
Life cycle and speed
of technological
obsolescence
Government organization /
attitude
Exchange rates Education Energy use and costs
Competition regulation Inflation rates Fashion, hypes (Changes in)
Information

9. Use of PEST AnalysisUse of PEST Analysis
 It helps you to spot business orIt helps you to spot business or
personal opportunities, and itpersonal opportunities, and it
gives you advanced warning ofgives you advanced warning of
significant threats.significant threats.
It reveals the direction of changeIt reveals the direction of change
within your businesswithin your business
environment. This helps youenvironment. This helps you
shape what you're doing, so thatshape what you're doing, so that
you work with change, ratheryou work with change, rather
than against it.than against it.

10. Use of PEST AnalysisUse of PEST Analysis
 It helps you avoid starting projectsIt helps you avoid starting projects
that are likely to fail, for reasonsthat are likely to fail, for reasons
beyond your control.beyond your control.
 It can help you break free ofIt can help you break free of
unconscious assumptions when youunconscious assumptions when you
enter a new country, region, orenter a new country, region, or
market; because it helps youmarket; because it helps you
develop an objective view of thisdevelop an objective view of this
new environment.new environment.

11. How to use PEST Analysis?How to use PEST Analysis?
Step 1: Brainstorm FactorsStep 1: Brainstorm Factors
Step 2: BrainstormStep 2: Brainstorm
OpportunitiesOpportunities
Step 3: Brainstorm ThreatsStep 3: Brainstorm Threats
Step 4: Take ActionStep 4: Take Action

12. Thank YOUThank YOU
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