PEST Analysis Video

Video Transcript

Understand your environment,
with James Manktelow & Amy Carlson.

James Manktelow: Hello. I'm James Manktelow, CEO of, home to hundreds of free career-boosting tools and resources.

Amy Carlson: And I'm Amy Carlson from Mind Tools.

When organizations develop their strategies, there are dozens of important factors they have to consider.

For instance, how will new laws and government policies affect them?

What technological changes are likely to help or hinder their progress?

How will changes in people's lifestyle affect their product offering?

As you might imagine, these are all things that can really impact an organization's plan of action.

JM: This is why using PEST Analysis is so useful.

Going through this analysis helps you avoid actions that are likely to fail because of factors that are outside your control. It also helps you to spot opportunities that you can take advantage of.

AC: PEST is an acronym that stands for Political, Economic, Socio-Cultural, and Technological.

To use it, you first brainstorm situations or issues that might be related to each of these four factors.

For instance, take Political.

What is the government like where you'll be doing business? Is that government stable? What is the tax policy like?

JM: Next you'll want to look at the Economic factors that could impact your organization.

What is the projected economic growth in your region? What's the impact of globalization? What are the labor costs?

Socio-Cultural factors are next. Here you want to look at population and lifestyle factors that could impact your organization.

For instance, are there any social taboos or unexpected social norms that your organization is overlooking?

The last factor you need to consider is Technological. Here, you'll look at the impact of emerging technologies, the Internet, and research and development.

AC: It's key that you do a thorough analysis for each of the four factors.

However, the most important part of the PEST Analysis is what you do after you've brainstormed all this information.

Just writing it down isn't enough. You need to draw conclusions from all this information, and use those conclusions when you develop your strategy.

JM: PEST Analysis is a simple tool that allows you to look at the big picture when your organization is developing its strategy.

Usually, these four factors are outside your control.

But, taking the time to brainstorm their impact, in advance, allows you to take advantage of the opportunities they create, and manage potential threats.

AC: You can learn more about PEST Analysis, and how to apply it to your organization, in the article that accompanies this video.

Where to go from here:

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