• PEST Analysis

    PEST analysis is used to identify the macro-economic conditions which drive the strategy of a company or business house. It is completely related to the macro-economic condition as it considers only the macro-economic factors.

    The main parts of PEST Analysis are

    • P- Political
    • E- Economic
    • S – Social
    • T – Technological

    PEST Analysis

    Political factors indicate how the domestic political environment affects the business and economy. Any laws, policy, initiatives by the government come under this category.

    Main Political factors are as follows

    • Political Stability or Stable government
    • Proper laws and legal framework
    • Proper IPR and Copyright protection
    • Government policies regarding human rights
    • Favorable tax rate and taxation policies
    • Favorable labor laws
    • Trade laws and bi-lateral agreements with other countries
    • Encouraging corporate laws and policies
    • Favorable policies for foreign investment
    • Proper Security

    Economic factors indicate the economic health and its suitability for more economic and industrial growth. Economic health includes Purchasing Power Parity, GDP per Capital, GDP growth etc. All the major economic factors are outlines as follows

    • Economic Growth and Industrial Growth
    • GDP Per Capita
    • Purchasing Power Parity
    • Number of Consumers
    • Interest rate
    • Inflation rate
    • Exchange rate and currency stability
    • Unemployment rate
    • Consumer confidence
    • Active Labor forces
    • InvestmentOpportunity
    • Trade Balance
    • Balance of Payment

    Social factors include the cultural and social aspects of a country. Better social aspects and parameters always set up the basic foundation for higher economic and industrial growth. Main social factors involved here are

    • Demographic including growth rate, sex ratio, age distribution, Population density etc.
    • Social culture and lifestyle
    • Basic and Higher Education
    • Human Development index
    • Social safety and benefits

    Technology factors indicate the technological aspects of a country including R&D, Technological changes, technological advancement and acceptance etc. As per economics, technological advancement plays an important role in driving GDP growth for an economy. Technological advancement and more innovation lead to faster growth. The main technological factors are as follows

    • Technological Development
    • Innovation
    • R&D
    • Skilled resources
    • Easier acceptance of new technologies
    • Information and Communication
    • Number of Technology institutes

    PEST Analysis is widely used for analyzing the macro-economic environment before finalizing the business and expansion strategy.

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