Pest examination – Great Strategic Tool And Framework


The ecosystem that surrounds the corporate world is ever changing. It has evolved into something real complicate and dynamic. The business you own won’t function in a vacuum ecosystem. That is to say that there would be several external factors surrounding it and influencing it. This external ecosystem is called the macro-ecosystem and the factors that are involved in it are:

Political Economic Social Technological

Political Factors

The political factors need to be considered which influence the external business ecosystem such as employment laws & regulations, consumer protection laws, environmental regulations, government taxes, competition regulations, etc. These political factors are there for all the businesses. It is how you work around these forces.

Economic Factors

Next we have the Economic factors that influence the external ecosystem of your business. These include economic growth trends and patterns, government expenditure levels, disposable income, unemployment rate, etc. The disposable income of the customer is an important consideration and so is the unemployment rate. Consider a high unemployment rate due to which your possible customers won’t have income to buy your products. Their purchasing strength will be very low consequently it will affect your business negatively.

Social Factors

Social factors are also an important consideration for every business. One should carefully analyze the demographics, trends, fact, leisure activities, living standards, education, lifestyle changes, etc.

Technological Factors

Lastly, we have the technological factors which include new inventions & discoveries, health, waste removal, research & development, logistics & communication advancements, etc.

PEST examination

All the above carefully need to be analyzed. Every business should conduct a thorough PEST examination in order to get better acquainted with the external ecosystem that surrounds it. PEST is a framework which is used to analyze the macro environmental factors mentioned above. PEST examination deals with the external ecosystem and is used as a strategic tool. This strategic tool helps you see and understand the “bigger picture” of the macro ecosystem that surrounds your business.

The political, economical, social and technological factors that are present in the ecosystem in which your business has to function in are considered closely in the PEST examination. The PEST examination enables a business to understand these external factors fully and take advantage of the opportunities that exist. Furthermore, it helps a business foresee any threats that exist in the ecosystem and minimize them consequently. PEST examination is a great strategic tool and helps the business make the right decisions keeping in mind the ever changing external ecosystem that surrounds the business.

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