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Business Research -- Industry Analysis

Descriptions of PEST / PESTLE Analysis

PEST Analysis is used to assess the market environment for a business.

  • Political
  • Economic
  • Social
  • Technology

There are variations of the model which identify other factors, although some researchers argue that those additional factors are just aspects of the main four. Variations include reorganization of the letters (ESTP, STEP) or the addition of Legal, Environmental, Ethical, Legislative, International, Industry, or Demography (PESTLE, STEEP, STEPE, STEEPLED, PESTELI).

PESTLE Analysis - Political

Examples:

  • government type and stability
  • freedom of press, rule of law, levels of bureacracy & corruption
  • regulation and de-regulation trends
  • social and employment legislation
  • tax policy and trade & tariff controls
  • likely changes in the political environment

PESTLE Analysis - Economic

Examples:

  • stage of business cycle
  • current & projected economic growth, e.g. GDP / GNP growth
  • inflation & interest rates
  • unemployment and labor supply
  • labor costs
  • levels of disposable income & income distribution
  • impact of globalization
  • likely impact of technological or other change on the economy
  • likely changes in the economic environment

PESTLE Analysis - Social

Examples:

  • population growth rate and age profile
  • population health, education & social mobility, and attitudes to these
  • population employment patterns, job market freedom & attitudes to work
  • press attitudes, public opinion, social attitudes & social taboos
  • lifestyle choices and attitudes to these
  • socio-cultural changes
  • health consciousness

PESTLE Analysis - Technology

Examples:

  • impact of emerging technologies
  • impact of internet, reduction in communication costs & increased remote working
  • research & development (R&D) activity
  • impact of technology transfer
  • degree of automation
  • rate of technological change

PESTLE Analysis - Legal

Examples:

  • antitrust law
  • consumer law
  • discrimination law
  • employment law
  • health & safety laws

PESTLE Analysis - Environmental

Examples:

  • weather
  • natural disasters
  • climate
  • climate change
  • environmental taxes
  • demand for "green" products

History of PEST Analysis

In his 1967 book, Scanning the Business Environment, Francis Joseph Aguilar identified four aspects of the external environment in which an industry operates: Economic, Technological, Political, Social (ETPS).

Other authors have reorganized the letters and added new categories over the years. The following articles include some of the variants.

If you're doing a PESTLE analysis for a company or industry in the United States

Resources for PESTLE Analysis

OECD Economic Surveys & Outlook

Country Reports from Business Source Premier

Business Source Premier -- scroll down to Business Source Premier and select "Enhanced Business Searching Interface" and then Browse: Country Reports

Business Monitor International

  • Regional Monitors -- "Political & economic analysis with specific asset class forecasts for over 64 emerging markets globally. How portfolio managers are investing in the emerging markets & financing & credit record."
  • Business Forecast Reports for specific countries -- "Contains detailed forecast covering political risk, economic outlook & industry performance, set against global economic trends"

CountryWatch Incorporated

  • Country Reviews -- "Includes geographical, political, economic, corporate, & environmental information"

EIU: Economist Intelligence Unit (content no longer available)

  • Country Report -- "Evaluates growth prospects, assesses opportunities and examines problems. Provides concise and lucid business-oriented analysis of the latest economic and political indicators."

Going Global

  • Career Guides -- provide information for specific countries about employment trends & opportunities, financial considerations, interviewing advice, job application guidelines, job search resources, and work permits & visas"

Icon Group International, Inc. (no longer included?)

  • Economic Studies -- "helps executives evaluate strategic investments in [each country]... The methodology decomposes a country’s strategic potential along two key dimensions: (1) latent demand, and (2) trade indicators."
  • Economic Competitiveness -- Financial Returns, Labor Productivity, and International Gaps

IHS Global Insight, Inc.

  • Country Monitor -- "In-depth economic analysis and detailed information. Reports analyze financial markets, political development, and investment opportunities. Forecasts and risks in the economy are evaluated."

MarketLine, a Datamonitor business

  • Country Profiles -- "presents analysis of the political, economic, social, technological, legal, and environmental (PESTLE) aspects based on the country's strengths, challenges, and risks"

OECD: Organisation for Economic Cooperation & Development

PRS Group, Inc.

  • Political Risk Yearbook: Country Reports

Superintendent of Documents

  • Background Notes on Countries of the World -- see also Background Notes (U.S. State Department)