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The PEST analysis is a useful tool for understanding market growth or decline, a

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Pest Analysis The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. Political The political area has a huge influence upon the regulation of a business and the spending power of consumers and other businesses. Before I put my product on the market I need to consider issues such as: Tax policy: I will need to look at certain levels of tax. If tax is high it can affect the incomes of customers and it might affect their buying power for my product. ...read more.


Economic Factors Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macro economy. Interest rates: When my product is on the market I will need to look at interest rates and see how much spending power consumers will have. if there are higher interest rates consumers will not have as much money to spend and this could affect my product. Inflation rate: when my product is on the market I will need to took at inflation and see what percentage it is at and see what the trend to see if it is going up or down. Having a higher rate of inflation consumers will have lower incomes and the consumers will not have as much spending power. ...read more.


Population Growth Rate: looking at population growth rate and demand for my product I could meet the demand with the correct supply. I do not want to under or over supply in the market. Age distribution: looking at the age distribution I can look at my target audience in the different groups and predict how much of my product I need to supply. Technological factors The technological factors can lower barriers to entry. Reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include: Technology changes, with changes in technology it will have an effect on my product. With changes in technology I could find ways of producing my product at lower costs. Also with technology changes other companies could make my product dated if something new its bought to the market. ...read more.

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