How to Use PEST Analysis Video

Video Transcript

Find out what forces of change are affecting your business environment.

Welcome to Mind Tools' video learning series.

All organizations need to understand and adapt to the environments they operate in. These might include factors outside of your control, such as laws, lifestyle changes, and technological trends.

But, when you're able to anticipate how these factors might impact your business in the future, you'll find it easier to identify and seize new opportunities, and avoid potential threats.

So, how can you analyze your business environment effectively?

A powerful tool for doing this is PEST Analysis. This is a simple, four-point framework you can use to assess the Political, Economic, Socio-cultural, and Technological factors at play.

Your analysis can help you to understand the forces of change at play in your environment and guide your strategic decision making.

Start by considering the political factors that affect your business. For example: are any elections due to be held, and how are they likely to play out? Will legislation or taxation laws change? And, how could this affect your organization?

Then, do the same for economic factors. How stable is the economy? Is it growing or shrinking? What is the unemployment rate? How is inflation impacting your industry? And, are these factors likely to change much?

Next, consider the socio-cultural factors of your external environment. How might the rate of population growth or decline affect your business? What about the quality of the health and educational systems? Are social and cultural values changing? And, what will the impact of this mean for you?

Finally, brainstorm the technological factors influencing you. Are there any new technologies you could be using? Or, are any being developed that could affect your industry in the future?

Once you've finished your analysis, brainstorm the opportunities and threats that each area presents. Then, identify actions that you can take to exploit any opportunities, and to manage or eliminate threats.

To learn more about PEST Analysis, read the article that accompanies this video.

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Comments (9)
  • Over a month ago James wrote
    Hi Everyone

    We’ve given this popular article a review, and the updated version is now at :

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  • Over a month ago MichaelP wrote
    bmashoko, this is a very insightful comment and thank you for sharing it. I fully agree that the triple bottom line has become a reality for many companies. Embracing the environmental impact and sustainability of their company is the future, calculating their carbon footprint and then diligently working to reduce it. Like many aspect of business we tend to focus on what we are measuring so to me measurement is the starting point for focus.

    The legal piece is also relevant in some cultures more than others - Certainly in the US it is sadly! critical and becoming more so as other cultures become more litigious.

  • Over a month ago bmashoko wrote
    I think it would be helpful to include or mention the additional components of the PEST tool (Environment and Legal) since they are increasingly used and sustainable environmental management has become such a big issue in many economies.
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