Analysing problems and preparing decision making

1. Tool D7PEST analysis -
picturing the political, economic, socio-cultural
and technical environment
A PEST analysis makes sure that all relevant context conditions of a
project or a strategy have been duly considered. It depends on the
project whether these four basic items are sufficient in order to de-
pict the full picture. Hence, also other acronyms are in use for simi-
lar analytical approaches (see below), but PEST is the most effective
“sticker”.
A PEST analysis can be applied as a stand-alone tool but is normally
used as an accompanying approach of SWOT analysis or within the
framework of a GOPP process.
For carrying through this analytic task, it is recommendable to visu-
alise the process and use normal brainstorming procedures and rules
resulting in four clearly defined steps:
• Step 1
Collect all contributions of the assisting people under the head-
line of each of the four (or more) items.
• Step2
Structure them according to criteria which are meaningful to the
project you are talking about.
• Step 3
Rank and relate important factors within each sector according
to their relevance for the project.
• Step 4
Draw conclusions from the picture for what you want to do. Re-
late important factor to each other, also across sectors.
This last step is the decisive one as it is useless just to describe
factors without thinking through what they mean. However, be
careful not to assume that your analysis is perfect: use it as a
starting point, and test your conclusions against the reality you
experience.
Of course, it depends on the subject of analysis which aspects might
be of importance to depict a meaningful picture under each of the
four (or more) headlines.
Here is a list of possible items assuming the case that a firm or a
network of firms wants to start economic activities in a certain for-
eign country or region.
Cf. Tools D6 and C4
Cf. Tool A10
21.07.2008, 11:39:36

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The example
questions have been
taken from
www.mindtools.com
Political:
• Government type and stability
• Freedom of press, rule of law and levels of bureaucracy and corrup-
tion
• Regulation and de-regulation trends
• Social and employment legislation
• Tax policy, and trade and tariff controls
• Environmental and consumer-protection legislation
• Likely changes in the political environment
Economic:
• Stage of business cycle
• Current and project economic growth, inflation and interest rates
• Unemployment and labor supply
• Labor costs
• Levels of disposable income and income distribution
• Impact of globalization
• Likely impact of technological or other change on the economy
• Likely changes in the economic environment
Socio-Cultural:
• Population growth rate and age profile
• Population health, education and social mobility, and attitudes to
these
• Population employment patterns, job market freedom and attitudes
to work
• Press attitudes, public opinion, social attitudes and social taboos
• Lifestyle choices and attitudes to these
• Socio-Cultural changes
Technological Environment:
• Impact of emerging technologies
• Impact of Internet, reduction in communications costs and in-
creased remote working
• Research & Development activity
• Impact of technology transfer
Other variants of PEST
Some people prefer to use different variants of PEST analysis using
other factors for different situations.
• PESTLE/PESTEL
Political, Economic, Sociological, Technological, Legal, Environ-
mental
• PESTLIED
Political, Economic, Social, Technological, Legal, International,
Environmental, Demographic
• STEEPLE
Social/Demographic, Technological, Economic, Environmental,
Political, Legal, Ethical
• SLEPT
Social, Legal, Economic, Political, Technological
• STEEPV
Social, Technological, Economic, Environmental/Ecological, Po-
litical, Value-based issues
Choose what suits you most!