What is a PEST analysis? Assessing your company's macro environment

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A PEST analysis is one of the useful tools for strategic analysis. It allows you to isolate the external factors that affect the company’s condition and points out the opportunities and threats associated with them. It can be compared to a slightly more elaborate version of the SWOT analysis. PEST is an acronym for words that describe the following factors: political, economic, social, and technological. Read on to learn more.

PEST analysis – index:
Areas assessed by PEST analysis
How to do a PEST analysis in 9 steps
A PEST analysis with examples
Areas assessed by PEST analysis
Political factors – refer to the political and legal situation in the country where the company is located, as well as in the world. It is important to pay attention to the current legislation and tax system. Regulations that restrict monopolistic practices can be a barrier for well-established companies.
Economic factors – concern the economic situation in the country and the world – important factors include GDP, inflation, unemployment rate and interest rate.
Social factors – are conditioned by culture, professed values, demographics, consumption patterns, etc.
Technological factors – with the intensive development of armenia whatsapp number database and innovation, they are increasingly important in the strategic activities of companies.
PEST Analysis
How to do a PEST analysis in 9 steps
Assessing your company’s macro environment requires thorough research, but the insights you’ll gain will certainly be worth it. It will allow you to gain an objective perspective and provide solutions to any issues that arise.

Identify the subject of analysis – this could be a specific economic sector, a business idea or a new product or service. It is important to specify it so that you know where and what information to look for.
Find the purpose of the analysis – entering a new market, changing an existing strategy, solving a problem, or uncovering potential market opportunities?
Get the data you need – it’s best if you break the process down into the 4 pillars mentioned above – political, economic, social and technological. Due to their nature, they will often be connected or dependent on each other.
Know the political and historical context – past events have shaped the current state of the industry. In turn, the parties in power may have made decisions that directly or indirectly affect it. In retrospect, do you notice any differences in the functioning of the object of your research (changes in legal regulations, taxation, etc.)?
Use widely available economic statistics and sources – any economic growth or downturn can affect your company’s situation. Check how similar companies have fared over the years so you don’t make the same mistakes.
Study social relationships – examine prevailing consumer behavior, purchasing trends, as well as professed values ​​and opinions. You can find this out from opinion poll reports and your own observations.
Explore the impact of technology – what technology solutions are being used in your industry, service, product? Have there been recent innovations that you could draw inspiration from when developing your own strategy?
Distinguish the relevant factors in relation to the components of the company's macroenvironment – ​​which of them have the greatest and least impact on the organization's performance?
Answer the question – how do the identified factors affect (or will affect in the future) the company’s development? What opportunities and threats do you see?
A PEST analysis with examples
Example 1. Your own candle business
Political factors – No matter what type of business you decide to start, you will have to meet certain requirements. Selling candles involves meeting standards regarding the type of substances you will use to make the products and describing the characteristics of each product.
Economic factors – the popularity of scented candles has been heavily influenced by the pandemic, during which more sales of these products have been reported. Despite this, homemade products do not have as much weight, and sole proprietorships are mainly focused on the local market. This is not necessarily bad news – the low investment cost can quickly pay for itself, provided it is promoted and targeted effectively.