4 steps of the PEST analysis process
Chang Hewitt
December 18th, 2022 • 5 min read
Summary
A PEST analysis is a research tool that helps you analyze the surrounding political, economic, socio-cultural, and technological environment that can affect your business. Learn how this tool can help prevent risk and inform your team’s future business decisions.
What is a PEST analysis?
A PEST analysis is a research tool that helps you analyze the external political, economic, socio-cultural, and technological changes that can affect your business. This is a shortened version, as sometimes the acronym is lengthened to PESTEL to include legal and environmental factors in addition to the first four.
PEST analysis vs. SWOT analysis
A PEST analysis is often associated with a SWOT analysis, but these two tools focus on different parts of your strategy.A PEST analysis is a tool to help analyze the external environment so your team can create more accurate decisions for big picture financial decisions. This is the tool you would use when you are considering any economic factors or potential changes to your business strategy.A SWOT analysis narrows in on a more project-specific level. SWOT analysis helps to find strengths, weaknesses, opportunities, and threats for a specific project or business plan. You can use information from a PEST analysis to inform a SWOT analysis.
When to use a PEST analysis
A PEST analysis can help you break down and understand external conditions and changes that are impacting your business. You can use a PEST analysis reactively to understand unexpected changes or proactively to evaluate whether a market or decision is right for your company. Take a look at some specific instances where a PEST analysis can be beneficial.
