Strategic Planning with the PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors Framework
PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors is a technique that enables better strategic planning in business.
The PEST framework describes the macroeconomic factors that can affect strategic management. These are part of the environmental, or external, market scan.
- Political factors, or how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bads).
- Economical factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy
- Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates.
- Technological factors include ecological and environmental aspects, such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions.
The PEST factors combined with external micro-environmental factors can be classified as opportunities and threats in a SWOT analysis. PEST/PESTLE alongside SWOT and SLEPT can be used as a basis for the analysis of business and environmental factors.
Other Strategic Planning Frameworks
- 4P's Marketing Mix
- Seven S (7S) Management Framework
- AIDA - Attention, Interest, Desire, Action - Buying Process
- Ansoff's Matrix - Product-Market Growth Matrix - Expansion Strategy
- BCG Growth-Share Matrix
- Bass Diffusion Model - Product Adoption and Innovation
- Blue Ocean Strategy
- Choice Model for Decision-Making Behavior
- Competitive Advantage
- Core Competence - Collective Learning in the Organization
- Cost-Benefit Analysis
- Delta Model
- ERG (Existence, Relatedness, Growth) Theory of Motivation
- Experience Curve
- Framing Effect on Psychology and Marketing
- GE (McKinsey) Matrix
- Growth Phases
- Predicting Industry Evolution and Change
- OODA Loop - Observe, Orient, Decide, Act
- PDCA (Plan, Do, Check, Act) - The Deming Cycle
- PEST Analysis - Political, Economical, Social, Technological, Environmental, and Legal Factors
- Perceptual Mapping - Brand Marketing
- Porter's Five Forces
- Product and Marketing Positioning
- Product Lifecycle (Industry Lifecycle)
- Root Cause Analysis
- SWOT Analysis - Strengths, Weaknesses, Opportunties, Threats
- Technology Adoption Curve
- Value Chain
- Balanced Scorecard
- Customer Segmentation
- Pricing Strategy & Price Optimization
- Mergers and Acquisitions (M&A)
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