For example, if your topic is from America, research current political parties. Who is responsible? Did it affect your topic in any way? A framework for assessing political, economic, social, technological, environmental and legal factors These factors relate to technological innovations that may have a favourable or unfavourable impact on the functioning of the industry and the market. It is about automation, research and development, and technological awareness of a market. These factors are determinants of an economy`s performance that directly affect a business and have long-term effects. For example, an increase in an economy`s inflation rate would affect how firms value their products and services. In addition, it would affect a consumer`s purchasing power and change supply and demand patterns for that economy. Economic factors include inflation rate, interest rates, exchange rates, economic growth patterns, etc. It also takes into account FDI (foreign direct investment), depending on some specific industries that go through this analysis. One of the most commonly used analytical tools to assess external macroeconomic factors related to a particular situation is PEST analysis. Think Facebook. The company`s CEO, Mark Zuckerberg, has been in hot water many times over the past year.
Whether it`s for the data breaches that affect millions of users, but for their shady involvement in fake news and political manipulation. This has led many consumers to avoid using Facebook. And this applies to businesses that use Facebook to reach new customers. This section of the PEST analysis is also somewhat abstract. You will examine how new technological advances have had a positive or negative impact on your topic. You should also check what technology your theme uses (currently). And what technology they want to integrate. These factors are more unpredictable than economic and political factors. Because social factors influence your target market. Many financial services industry analysts tend to overweight economic factors in their analysis because they are easier to quantify and model than some of the other factors in this framework (which are somewhat qualitative in nature). For example, if there is political instability and the economy is rising, consumers may feel uncomfortable. You may have fewer job options.
And that means they`re less likely to spend frivolously. If your theme is a luxury product, it may mean that the company that makes it may make lower sales this year. Social factors that can be included in a PEST analysis are demographics and age distribution, cultural attitudes, and workplace and lifestyle trends. But social factors influence consumer attitudes. This is what makes a customer buy now instead of buying later (or never). Overall, political factors are those that are driven by government actions and policies. They include, but are not limited to, considerations such as: By looking at these recent developments from an economic and technological perspective, owners decide whether to incorporate them over the long term or for the time being. New business owners and veterans should include PEST analysis in their business plan.
PEST can help you identify significant changes in the political, economic, social and technological landscape. And these landscapes will impact your business in the future. By breaking down critical influences into these four categories, entrepreneurs better understand whether their next business move is strategic or silly. PEST (Political, Economic, Social and Technological) analysis is a management method that allows an organization to assess the main external factors affecting its operations in order to become more competitive in the market. As the acronym describes, these four areas are at the heart of this model. This section is a bit trickier. Politics and business rely heavily on data and evidence. You can find this information on government websites. Information sites even. And while you can find databases on demographics and population growth for this section – all applicable in a PEST analysis – I wouldn`t stop there. If your topic (economy, product, industry) was established years ago, what was the political climate at the time? Are there different parties in power today? If so, you should compare how things have changed for your topic since then until now.
These factors examine the social environment of the market and measure determinants such as cultural trends, demographics, demographic analysis, etc.