PEST-analysis: application example

PEST-analysis is one of the marketing tools used to investigate external factors affecting the company's operations. It is effective in developing long-term strategies and plans.

PEST-analysis is aimed at studying the following areas:

"P" (politics) is politics;

"E" (economy) - the economy;

"S" (society) - society, social relations ;

"T" (technology) - technological aspects.

It is also known as the STEP analysis, but the essence of it does not change. Many marketers are expanding their environmental studies, applying to the general studies the analysis of additional areas of social activity.

This type of research, unlike swot analysis, is aimed at studying external factors that directly or indirectly affect the company's activities.

Political aspect

PEST-analysis using the example of a study of the political situation can help to respond in a timely manner to changes in the legislative or tax component in the activities of the enterprise. Thanks to the information received in the shortest possible time, the company gets a competitive advantage and can concentrate on other, more important aspects. The political aspect, partly forming a PEST analysis, an example of which can be seen with the naked eye, greatly affects the activities of any company.

The economic aspect

First of all, the external factors of the economic environment are being investigated, which form the financial atmosphere of not only a single enterprise, but also the country as a whole. The prices for energy resources, budget deficit, taxation norms and many other things are those areas that PEST analysis is exploring. An example of their influence on the activity of an enterprise can be seen in the consequences of inflation, which leads to corresponding changes in prices for manufactured goods or services.

The social dimension

PEST-analysis, an example of which is in the study of consumer preferences and expectations, form the company's product portfolio. Behavioral and cultural factors greatly influence the commercial activities of the firm. So, for example, goods that are in demand among residents of the western region, can be absolutely negatively accepted by the people of the Arab world.

Technological aspect

Innovative technologies always give a huge competitive advantage to those who own them. For this reason, it is necessary to carefully monitor the appearance of new technologies in the field of the company. In addition, it is important to analyze the presence or possibility of the appearance of goods that can eliminate the need for manufactured products. Incorrectly conducted PEST-analysis (an example of this can be seen in the history of the company Kodak) can lead to a complete collapse. At the end of the 20th century, the named corporation assumed that its main competitors are firms specializing in the production of film cameras. But by that time the development of digital cameras had already begun, which Kodak did not attach much importance to. Thus, today the market of digital photographic equipment is saturated with manufacturers, among which the previously known company did not enter.