Understanding PEST Analysis: A Key Tool for Strategic Business Planning (Full Transcript)

Speaker 1: What is PEST analysis? PEST stays for political, economic, social, and technological. PEST analysis provides a view on macroeconomic factors that could have an impact on the business or the organization. It is important to underline that the PEST analysis is focused on the macroexternal factors. To understand clearly what I mean by macroexternal factor, look at this diagram. Imagine three circles. There are the internal factors that are what you can control within your organization. There are external factors that is what are not internal to your organization, but you have some form of control. For example, the suppliers. In the bigger circle, there are the macroexternal factors that are the factors that are external to your organization, and you have not any form of control. The goal of the PEST analysis is to have a structured process that helps you to understand what is changing around you and make strategic decisions. The PEST analysis can be used, for example, to develop a new product or expand in new states. It is important that any statement is substantiated by data. As for the SWOT analysis, my favorite layout for the PEST analysis is the four quadrants layout. Hear the process step by step. Step 1. Set a meeting with the team with a clear description of the project you want to evaluate. Step 2. Take a big piece of paper and draw four blocks with the titles inside. Step 3. Fill the square of the political factors. Here's some point to take into account. Regulating competition. Taxation. Foreign trade. Corruption. Business policy. Step 4. Fill in economic factors. Here's some point to take into account. Interest rate. Unemployment. Inflation. Economic cycle. Purchasing power. Step 5. Fill in the social factors. Here's some point to take into account. Demographics data. Consumers trends. The health of the population. Income levels. Lifestyle. Step 6. Fill in the technological factors. Here's some point to take into account. Artificial intelligence. Cyber crime. Big data. Robotics. Tech incentives. Level of innovation. Automation. What is next? At the end of the PEST analysis you and your team should have a good overview of what is going on around you and how this could affect your plans. I suggest having the PEST analysis on the paper always visible to the team to be discussed and revised. Conclusion. The PEST analysis is a collaborative tool that has to be used regularly to evaluate the pros and cons of starting a project looking at the macro external factors. PEST analysis is a key tool to develop a business strategy. If you want one PDF with all the videos I suggest on PEST analysis just click the link below. If you loved this video please share, like, and subscribe. Thank you for watching.