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pestmarketanalysistool
PESTanalysismethodandexamples,withfreePESTtemplate
ThePESTanalysisisausefultoolforunderstandingmarketgrowthordecline,andassuchtheposition,
potentialanddirectionforabusiness.APESTanalysisisabusinessmeasurementtool.PESTisanacronymfor
Political,Economic,SocialandTechnologicalfactors,whichareusedtoassessthemarketforabusinessor
organizationalunit.ThePESTanalysisheadingsareaframeworkforreviewingasituation,andcanalso,like
SWOTanalysis(swotanalysisfreetemplate.htm),andPorter'sFiveForcesmodel
(portersfiveforcesofcompetition.htm),beusedtoreviewastrategyorposition,directionofacompany,a
marketingproposition,oridea.CompletingaPESTanalysisisverysimple,andisagoodsubjectforworkshop
sessions(workshops.htm).PESTanalysisalsoworkswellinbrainstorming(brainstorming.htm)meetings.Use
PESTanalysisforbusinessandstrategicplanning,marketingplanning,businessandproductdevelopmentand
researchreports.YoucanalsousePESTanalysisexercisesforteambuildinggames
(teambuildinggames.htm#pestteambuildingexercises).PESTanalysisissimilartoSWOTanalysis
(swotanalysisfreetemplate.htm)it'ssimple,quick,andusesfourkeyperspectives.AsPESTfactorsare
essentiallyexternal,completingaPESTanalysisishelpfulpriortocompletingaSWOTanalysis(aSWOT
analysis(swotanalysisfreetemplate.htm)Strengths,Weaknesses,Opportunities,Threatsisbasedbroadlyon
halfinternalandhalfexternalfactors).

freepestanalysistemplatetool
PESTanalysistemplatedocformat(freematerialsinword/PESTanalysistemplatedoc.doc)(thanksNSilva)
PESTanalysistemplatepdfformat(freepdfmaterials/pestanalysisfreetemplate.pdf)

pestvariations
ThePESTmodel,likemostverygoodsimpleconcepts,haspromptedseveralvariationsonthetheme.For
example,thePESTacronymissometimesshownasSTEP,whichobviouslyrepresentsthesamefactors.Stick
withPESTnearlyeveryoneelsedoes.
Moreconfusingly(andsomewouldsayunnecessarily)PESTisalsoextendedtosevenorevenmorefactors,by
addingEcological(orEnvironmental),Legislative(orLegal),andIndustryAnalysis,whichproducesthePESTELI
model.OthervariationsonthethemeincludeSTEEPandPESTLE,whichallowforadedicatedEthicalsection.
STEEPLEDisanotherinterpretationwhichincludesprettywelleverythingexceptthekitchensink:Political,
Economic,SocialandTechnologicalplusEcologicalorEnvironmental,Ethical,DemographicandLegal.
It'samatterofpersonalchoice,butformostsituationstheoriginalPESTanalysismodelarguablycoversallof
the'additional'factorswithintheoriginalfourmainsections.ForexampleEcologicalorEnvironmentalfactors
canbepositionedunderanyorallofthefourmainPESTheadings,dependingontheireffect.Legislativefactors
wouldnormallybecoveredunderthePoliticalheadingsincetheywillgenerallybepoliticallymotivated.
DemographicsusuallyareanaspectofthelargerSocialissue.IndustryAnalysisiseffectivelycoveredunderthe

Economicheading.EthicalconsiderationswouldtypicallybeincludedintheSocialand/orPoliticalareas,
dependingontheperspectiveandtheeffect.Thuswecanoftenseethese'additional'factorsas'subitems'or
perspectiveswithinthefourmainsections.
Keepingtofourfundamentalperspectivesalsoimposesadisciplineofconsideringstrategiccontextandeffect.
Manypotential'additional'factors(ethical,legislative,environmentalforexample)willcommonlybecontributory
causeswhichactononeorsomeofthemainfourheadings,ratherthanbebigstrategicfactorsintheirown
right.
Theshapeandsimplicityofafourpartmodelisalsosomehowmorestrategicallyappealingandeasierto
manipulateandconvey.
Ultimatelyyoumustusewhatversionworksbestforyou,andimportantlyforotherswhoneedtounderstand
you,whichisanothergoodreasonperhapsforstickingwithPEST,becauseeveryoneknowsit,andyou'llnot
needtospendhalfthepresentationexplainingthemeaningofSTEEPLEDorsomeotherquirkyinterpretation.
IfyouhavecomeacrossanyotherweirdandwonderfulextendedinterpretationsofPESTI'dlovetoseethem.
Onwhichpoint(thanksDTaylor)Iaminformedofonesuchvariation,whichfeaturedinsome2010coursework:
PESTLIED.ThePESTelementrepresentstheusualfactorsPolitical,Economic,SocialandTechnological.The
LIEDaddonstandsforLegal,International,EnvironmentandDemography.Suggestionsoforigingratefully
received,andanyothervariationsofthePESTmodel.

pestorswot
APESTanalysismostcommonlymeasuresamarketaSWOTanalysismeasuresabusinessunit,a
propositionoridea.
GenerallyspeakingaSWOTanalysismeasuresabusinessunitorproposition,whereasaPESTanalysis
measuresthemarketpotentialandsituation,particularlyindicatinggrowthordecline,andtherebymarket
attractiveness,businesspotential,andsuitabilityofaccessmarketpotentialand'fit'inotherwords.PEST
analysisusesfourperspectives,whichgivealogicalstructure,inthiscaseorganizedbythePESTformat,that
helpsunderstanding,presentation,discussionanddecisionmaking.Thefourdimensionsareanextensionofa
basictwoheadinglistofpro'sandcon's(freepro'sandcon'stemplatehere(problemsolving.htm#pro'sand
con'slistdecisionmakingtemplateexample)).
PESTanalysiscanbeusedformarketingandbusinessdevelopmentassessmentanddecisionmaking,andthe
PESTtemplateencouragesproactivethinking,ratherthanrelyingonhabitualorinstinctivereactions.
HerethePESTanalysistemplateispresentedasagrid,comprisingfoursections,oneforeachofthePEST
headings:Political,Economic,SocialandTechnological.
Aspreviouslyexplained,extendedvariationsofPEST(eg.,PESTELIandSTEEP,etc)includeotherfactors,
suchasEnvironmental,Ethical,LegalorLegislative,etc.,howeverinmostsituationsyouwillfindthatthese
'additional'factorsareactuallycontributorycausesordetailedperspectiveswhichthenmanifestortakeeffectin
theformoroneorseveraloftheoriginalfourmainPESTfactors.Forexample,EthicalandEnvironmental
factorswillalwaystendtoproduceaneffectinatleastoneofthemainfourheadings(Political,Economic,
Social,Technological),butitwilltendnottoworktheotherway.HencewhythebasicPESTmodelisoftenthe
mostpowerfulitputsmorepressureonstrategicappreciationandanalysisthanalongerlistofheadings.
WhenyounextseeaPESTELIoraSTEEPLEDanalysisaskyourself(ortheauthor):"Okay,Iunderstandthat
customerstendtobemoreethicallymindednow,butwhatdoesthatmeanintermsofthebasicfourPEST
factorswhat'stheeffectgoingtobe?..."or:"Okayweknowthatcarbonemissionsisanissue,buttellme
whereinthemainfourPESTfactorswillitimpact..?

YouwillgatherIamnotafannoraparticularadvocateofextendingthePESTmodel.Itworksgreatasitis
whymakeitmorecomplicatedandlessspecific?Ifyouareworriedaboutmissingorforgettingacrucialpointof
ethicsorlegislation(oranythingelse)keepareferencelistoftheseheadings,andonlybuildthemintothe
modelifyouaresurethatdoingsowillmakeitworkbetterasastrategictool.
ThefreePESTtemplatebelowincludessamplequestionsorprompts,whoseanswersarecanbeinsertedinto
therelevantsectionofthePESTgrid.Thequestionsareexamplesofdiscussionpoints,andobviouslycanbe
altereddependingonthesubjectofthePESTanalysis,andhowyouwanttouseit.MakeupyourownPEST
questionsandpromptstosuittheissuebeinganalysedandthesituation(ie.,thepeopledoingtheworkandthe
expectationsofthem).LikeSWOTanalysis,itisimportanttoclearlyidentifythesubjectofaPESTanalysis,
becauseaPESTanalysisisfourwayperspectiveinrelationtoaparticularbusinessunitorpropositionifyou
blurthefocusyouwillproduceablurredpicturesobeclearaboutthemarketthatyouusePESTtoanalyse.
Amarketisdefinedbywhatisaddressingit,beitaproduct,company,brand,businessunit,proposition,idea,
etc,sobeclearabouthowyoudefinethemarketbeinganalysed,particularlyifyouusePESTanalysisin
workshops,teamexercisesorasadelegatedtask.ThePESTsubjectshouldbeacleardefinitionofthemarket
beingaddressed,whichmightbefromanyofthefollowingstandpoints:
acompanylookingatitsmarket
aproductlookingatitsmarket
abrandinrelationtoitsmarket
alocalbusinessunit
astrategicoption,suchasenteringanewmarketorlaunchinganewproduct
apotentialacquisition
apotentialpartnership
aninvestmentopportunity
BesuretodescribethesubjectforthePESTanalysisclearlysothatpeoplecontributingtotheanalysis,and
thoseseeingthefinishedPESTanalysis,properlyunderstandthepurposeofthePESTassessmentand
implications.

PESTanalysistemplate
Otherthanthefourmainheadings,thequestionsandissuesinthetemplatebelowareexamplesandnot
exhaustiveaddyourownandamendthesepromptstosuityoursituation,theexperienceandskilllevelof
whoeveriscompletingtheanalysis,andwhatyouaimtoproducefromtheanalysis.
EnsureyouconsidertheadditionalPESTELI/STEEPLEDheadings,andanyothersyoufeelarerelevant,but
avoidbuildingtheseintothefinalanalysismodelunlessyougainsomestrategicplanningorpresentation
benefitfromdoingso.
Ifhelpfulrefertoalistoftheseother'headings',forexample:Ecological/Environmental,Legislative/orLegal,
Demographic,Ethical,IndustryAnalysis.Applysomestrategicconsiderationandpressuretothepointsyoulist
underthese'additional'headings.Askyourselfwhattheeffectsofeachwillbeonthe'bigfour'(Political,
Economic,Social,Technological).OftenyouranswerswillpersuadeyouthattheoriginalfourpartPESTmodel
isbestandthatusingamorecomplexseriesofheadingsmakesitmoredifficulttocompletetheanalysisfully
andstrategically.
Theanalysiscanbeconvertedintoamorescientificmeasurementbyscoringtheitemsineachofthesections.
Thereisareestablishedgoodorbadreferencepointstheseareforyoutodecide.Scoringisparticularly
beneficialifmorethanonemarketisbeinganalysed,forthepurposeofcomparingwhichmarketoropportunity

holdsmostpotentialand/orobstacles.Thisisusefulwhenconsideringbusinessdevelopmentandinvestment
options,ie,whethertodevelopmarketAorBwhethertoconcentrateonlocaldistributionorexportwhetherto
acquirecompanyXorcompanyY,etc.Ifhelpfulwhencomparingmorethanonedifferentmarketanalysis,
scoringcanalsobeweightedaccordingtothemoreorlesssignificantfactors.

(insertsubjectforPESTanalysismarket,business,proposition,etc.)
political
ecological/environmentalissues
currentlegislationhomemarket
futurelegislation
internationallegislation
regulatorybodiesandprocesses
governmentpolicies
governmenttermandchange
tradingpolicies
funding,grantsandinitiatives
homemarketlobbying/pressuregroups
internationalpressuregroups
warsandconflicts

social
lifestyletrends
demographics
consumerattitudesandopinions
mediaviews
lawchangesaffectingsocialfactors
brand,company,technologyimage
consumerbuyingpatterns
fashionandrolemodels
majoreventsandinfluences
buyingaccessandtrends
ethnic/religiousfactors
advertisingandpublicity
ethicalissues

economic
homeeconomysituation
homeeconomytrends
overseaseconomiesandtrends
generaltaxationissues
taxationspecifictoproduct/services
seasonality/weatherissues
marketandtradecycles
specificindustryfactors
marketroutesanddistributiontrends
customer/enduserdrivers
interestandexchangerates
internationaltrade/monetaryissues

technological
competingtechnologydevelopment
researchfunding
associated/dependenttechnologies
replacementtechnology/solutions
maturityoftechnology
manufacturingmaturityandcapacity
informationandcommunications
consumerbuyingmechanisms/technology
technologylegislation
innovationpotential
technologyaccess,licencing,patents
intellectualpropertyissues
globalcommunications

moreonthedifferenceandrelationshipbetweenPESTandSWOT
PESTisusefulbeforeSWOTnotgenerallyviceversaPESTdefinitelyhelpstoidentifySWOTfactors.There
isoverlapbetweenPESTandSWOT,inthatsimilarfactorswouldappearineach.Thatsaid,PESTandSWOT
arecertainlytwodifferentperspectives:

PESTassessesamarket,includingcompetitors,fromthestandpointofaparticularpropositionorabusiness.
SWOTisanassessmentofabusinessoraproposition,whetheryourownoracompetitor's.
Strategicplanningisnotaprecisesciencenotoolismandatoryit'samatterofpragmaticchoiceastowhat
helpsbesttoidentifyandexplaintheissues.
PESTbecomesmoreusefulandrelevantthelargerandmorecomplexthebusinessorproposition,butevenfor
averysmalllocalbusinessesaPESTanalysiscanstillthrowuponeortwoverysignificantissuesthatmight
otherwisebemissed.
ThefourquadrantsinPESTvaryinsignificancedependingonthetypeofbusiness,eg.,socialfactorsaremore
obviouslyrelevanttoconsumerbusinessesoraB2Bbusinessclosetotheconsumerendofthesupplychain,
whereaspoliticalfactorsaremoreobviouslyrelevanttoaglobalmunitionssupplieroraerosolpropellant
manufacturer.
AllbusinessesbenefitfromaSWOTanalysis,andallbusinessesbenefitfromcompletingaSWOTanalysisof
theirmaincompetitors,whichinterestinglycanthenprovidesomefeedbackintotheeconomicaspectsofthe
PESTanalysis.

seealso
Porter'sFiveForcesCompetitivePositionModel(portersfiveforcesofcompetition.htm)
SWOTAnalysisandTemplate(swotanalysisfreetemplate.htm)
MarketingandPlanningTemplates(freebusinessplansandmarketingtemplates.htm)
BalancedScorecard(balanced_scorecard.htm)
Projectmanagement(project.htm)
GenerationalNicknames/TypesModel(generationsnicknamestheories.htm)

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AlanChapman/Businessballs
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