In business analysis, PEST analysis ("political, economic, socio-cultural and technological") describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is part of an external environment analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro-environmental factors to be taken into consideration. It is a strategic tool for understanding market growth or decline, business position, potential and direction for operations.

PEST analysis was developed in 1967 by Aguilar as an environmental scanning framework.[1] Aguilar argued that firms must scan the economic, technical, political and social categories (ETPS) that may affect strategy, defining environmental scanning as follows, “scanning for information about events and relationships in a company’s outside environment, the knowledge of which would assist top management in its task of charting the company’s future course of action.”[1]


The basic PEST analysis includes four factors:


Variants that build on the PEST framework include:

Applicability of the factors

The model's factors will vary in importance to a given company based on its industry and the goods it produces. For example, consumer and B2B companies tend to be more affected by the social factors, while a global defense contractor would tend to be more affected by political factors. Additionally, factors that are more likely to change in the future or more relevant to a given company will carry greater importance. For example, a company which has borrowed heavily will need to focus more on the economic factors (especially interest rates). Furthermore, conglomerate companies who produce a wide range of products (such as Sony, Disney, or BP) may find it more useful to analyze one department of its company at a time with the PESTEL model, thus focusing on the specific factors relevant to that one department. A company may also wish to divide factors into geographical relevance, such as local, national, and global.


Whereas the PEST analysis is broadly used in business practice, critics argue that it has limitations. PEST analysis can be helpful to explain market changes in the past, but it is not always suitable to predict or foresee upcoming market changes.[18] The reason is that PEST analysis offers a broad range of categories that can be deceivingly simple because they lack specific criteria about what exactly catalyses disruption. In other words, the PEST analysis does not offer guidelines for what to emphasise and what not to emphasise within the categories. As a result, firms can be blindsided by disruptions that cannot be neatly defined within the categories.[18]

See also


  1. ^ a b c J., Aguilar, F. (1967). Scanning the business environment. Macmillan. OCLC 495475137.((cite book)): CS1 maint: multiple names: authors list (link)
  2. ^ Nandonde, Felix Adamu (9 April 2019). "A PESTLE analysis of international retailing in the East African Community". Global Business and Organizational Excellence. 38 (4): 54–61. doi:10.1002/JOE.21935. ISSN 1932-2054. Wikidata Q98854703.
  3. ^ Sridhar, R.; Sachithanandam, V.; Mageswaran, T.; Purvaja, R.; Ramesh, R.; Vel, A. Senthil; Thirunavukkarasu, E. (2016-07-02). "A Political, Economic, Social, Technological, Legal and Environmental (PESTLE) approach for assessment of coastal zone management practice in India". International Review of Public Administration. 21 (3): 216–232. doi:10.1080/12294659.2016.1237091. ISSN 1229-4659. S2CID 132405731.
  4. ^ Dalirazar, Sadaf; Sabzi, Zahra (2020-12-12). "Strategic analysis of barriers and solutions to development of sustainable buildings using PESTLE technique". International Journal of Construction Management. 23: 167–181. doi:10.1080/15623599.2020.1854931. ISSN 1562-3599. S2CID 234586813.
  5. ^ Ulubeyli, Serdar; Kazanci, Oguzhan (2018-11-20). "Holistic sustainability assessment of green building industry in Turkey". Journal of Cleaner Production. 202: 197–212. doi:10.1016/j.jclepro.2018.08.111. ISSN 0959-6526. S2CID 158121323.
  6. ^ Islam, F. R.; Mamun, K. A. (2017), Islam, F.M. Rabiul; Mamun, Kabir Al; Amanullah, Maung Than Oo (eds.), "Possibilities and Challenges of Implementing Renewable Energy in the Light of PESTLE & SWOT Analyses for Island Countries", Smart Energy Grid Design for Island Countries: Challenges and Opportunities, Green Energy and Technology, Cham: Springer International Publishing, pp. 1–19, doi:10.1007/978-3-319-50197-0_1, ISBN 978-3-319-50197-0, retrieved 2021-03-24
  7. ^ Achinas, Spyridon; Horjus, Johan; Achinas, Vasileios; Euverink, Gerrit Jan Willem (2019). "A PESTLE Analysis of Biofuels Energy Industry in Europe". Sustainability. 11 (21): 5981. doi:10.3390/su11215981.
  8. ^ Tan, J.; Chua, Wen Ling; Chow, C.; Chong, M.; Chew, B. C.; Melaka, Malaysia; Jaya, Hang Tuah (2012). "PESTLE Analysis on Toyota Hybrid Vehicles". S2CID 110872826. ((cite journal)): Cite journal requires |journal= (help)
  9. ^ Guno, Charmaine Samala; Collera, Angelie Azcuna; Agaton, Casper Boongaling (2021). "Barriers and Drivers of Transition to Sustainable Public Transport in the Philippines". World Electric Vehicle Journal. 12 (1): 46. doi:10.3390/wevj12010046.
  10. ^ Richardson, J. A Brief Intellectual History of the STEPE Model or Framework (i.e., the Social, Technical, Economic, Political, and Ecological), accessed 6 May 2019
  11. ^ Wild, Dave (2023). Futurework - A Guidebook for The Future of Work. Aotearoa New Zealand: Smith & Wild. p. 218. ISBN 978-0-473-66594-4.
  12. ^ Mason, L. (2018), Contract Administration, Chartered Institute of Procurement & Supply, p. 116
  13. ^ SPELIT Power Matrix, retrieved 2015-08-21.
  14. ^ Schmieder-Ramirez, J. and Mallette, L., Using the SPELIT Analysis Technique for Organizational Transitions, Chapter 28 of "Education Applications and Developments" edited by Mafalda Carmo, Science Press, 2015 Retrieved 2015-08-21.
  15. ^ Walden J. (2011), Comparison of the STEEPLE Strategy Methodology and the Department of Defense’s PMESII-PT Methodology, Supply Chain Leadership Institute, accessed 10 February 2019
  16. ^ Lawrence P. Carr; Alfred J. Nanni Jr. (28 July 2009). Delivering Results: Managing What Matters. Springer Science & Business Media. p. 44. ISBN 978-1-4419-0621-2.
  17. ^ McLeod, Sam (2021-06-29). "Interrelated Attributes of Project Feasibility: Visualizing the TELOS Framework". doi:10.14293/s2199-1006.1.sor-.ppt0zrs.v1. S2CID 237876039. ((cite journal)): Cite journal requires |journal= (help)
  18. ^ a b Diaz Ruiz, Carlos A.; Baker, Jonathan J.; Mason, Katy; Tierney, Kieran (2020-06-15). "Market-scanning and market-shaping: why are firms blindsided by market-shaping acts?". Journal of Business & Industrial Marketing. 35 (9): 1389–1401. doi:10.1108/JBIM-03-2019-0130. ISSN 0885-8624. S2CID 219736566.