PEST analysis is often considered as the shortened form of the PESTLE analysis. However, PEST was the one which was introduced first and is now being used by modern businesses worldwide. Such type of assessment involves the evaluation of different macro-environmental factors that may have an effect on the business. Most companies fail to realize that not only those that are within the boundaries of the organization have an impact on the success of the firm. While your employees and the internal processes among others have a direct impact on the productivity of your business, there are other things that you have to consider. These are the PEST evaluation factors which are the political, economical, social and technological aspects. The main thing that you are concerned about here is to find out how these PEST criteria are doing within the country, place or state that you are in. Over time, it has been proven that those organizations that have been using the PEST or PESTLE analysis have better chances of succeeding than those that only focus on the internal elements.
Starting with the political factors from the PEST criteria, these are about the political conditions that should be studied in order to make an objective decision regarding the various political situations in your location. Among those that are included here are the type of government that your state or country is in, the previous leadership record, the development plan of different political groups and whether or not the government supports various activities that can aid businesses in growing.
On the economic PEST criteria, you will need to learn about the standing of such classification especially when you are about to introduce a new product or service that is quite costly on your side. This way, you know that you have not wasted your money and your customers will be willing to pay the price of the goods that you will be putting out in the market. Among the elements here are the economic policies of the government and the per capita income.
The social factors should also be studied in the same way as the economic PEST criteria. You will need to learn how the customers or your target market will respond on the product that you are about to introduce. The social climate should be tested at first before putting out luxury merchandise. Otherwise, there is a huge chance that it will lead to the complete failure of that particular upcoming product.
Lastly, the technological PEST criteria contain the prevailing technological standard infrastructure within the region. Technological aspects are very important especially today. This is specifically helpful for those that are planning to expand their business. Nonetheless, understanding such elements can also help you gain advantage when it comes to introducing a new product. For instance, if you are planning to launch a high speed car but fast lane express highways do not exist in the place where you will be establishing the vehicle, you cannot expect your business to boom in that area. This is why measuring and evaluating the outside environment of your business is crucial to the success of your company.