PEST and Extensions for Analytical Purposes

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Learn how to analyze company's prospects in the 4 categoties of PEST analysis: political, economic, social and technological. PEST analysis is one of the most popular analytical business tools. Read more on PEST in this article. Check additional information about PEST and extensions.

Planning is all important and business. Without a comprehensive strategy a company is almost doomed to fail because of very tough competition in both national and international markets. It is impossible to plan anything without being aware of own strengths and weaknesses. Besides, there are so many factors that should be taken into account when making decisions, especially those related to release of new products and entering new markets. PEST analysis is considered to be one of the most popular and reliable tools to evaluate company prospects in the four categories: political, economic, social and technological. Every category is extremely important for all companies, especially those that operate in the international markets. Let's review PEST and its extensions to better understand how this analysis type works for various companies.

Political factor sometimes plays a crucial role in business development. It's not a secret that business cannot be isolated, and if something is going on in the country this will surely affect business performance. Politics influences all spheres of our live, and thus it influences customers. If customers do not feel secure because of unstable political situation, business will certainly suffer. That's why before entering a new market or releasing a new product it is very important to analyze political situation and its impact on business environment. There are countries where politics and economics are very closely connected. Even in developed democratic societies economy is very sensitive towards political statements. Political instability or political interference with market rules should be always taken into account.

Economic situation in the country directly influences purchasing power of people. In case people do not have money to buy products they will not buy them even if offered top quality products at very competitive prices. Sad but true! General economic situation in the country is something the company cannot change. That's why, business needs to get accustomed to existing economic environment and make unique commercial offers that people would accept. Such factors as inflation, GDP growth, purchasing power, national debt and unemployment rate are among the most important.

Much has been said about social responsibility of business. Indeed, business is a part of society and it functions according to its rules and norms which are fairly different in different countries. For example, a Japanese Company starting business in the U.S. should certainly take into account mentality of American people, their habits and customs. Participation in social projects can also improve company image and thus contribute to sales growth. It is extremely important to let customers know that the company takes care about them and is willing to know what customers think about it.

Technology has changed business forever. Every year we learn about new technologies being applied in various industries. Failure to keep up with technological process automatically means loss of competitive advantage. For this reason, major companies allocate huge funds for research and development, as well as adoption of new technologies that improve quality of products and in most cases make them cheaper.

Having conducted a thorough analysis in the four categories the company will possess enough information to move on.

If you are interested in PEST and extensions, check this link to find out more about PEST and extensions. Also, you can check other articles in BSC Guides category.

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