The PEST analysis is a strategic tool used to scan the external macro-environment in which a company operates. PEST factors play an important role in the opportunities of value creation for a strategy.
However they are usually outside the company’s control and should normally be considered as threats or opportunities.
Originally, the PEST analysis is an acronym for the factors, Political, Economic, Social, Technological.
There are variations, the PEST(E) analysis , which integrates the Ethics and PESTE(L) analysis in which is added the Legal factor.
Moreover, geographical factors can be significant. Indeed, macroeconomic factors may vary by continent, country or even region, a PEST analysis will be carried out by countries. The PEST analysis can be used for the business and strategic planning, marketing planning, business development, product research.
Completing a PEST analysis matrix can be relatively simple, using brainstorming sessions. What is important is to give meaning to the PEST(EL) analysis by choosing the most adapted version to the vocation of the company.
The PEST analysis should be a regeneration tool for the company. You will get better results by adopting a research and a participative innovation approach and by coordinating research information among participants.
After the analysis, synthesis should generate new business segments and a policy to commitment of finance, human and material aspect for several years. From the PEST(EL) analysis matrix It is crucial to identify links and trends between all elements.
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