PEST Analysis Essay examples

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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
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Environmental regulations: when making my product I need to think about what effects my product could have on the environment. Also I will need to make it safe for people to use. I will need to use the correct materials when making my product and make sure when producing I don’t pollute the environment.

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. Not having as much spending power my product may not be consumed as much and will affect my total revenue.

Economic growth: when launching a new product it will add to the output of the country. More products are been sold and consumed and will create economic growth, this can be measured by the real GDP (gross domestic product) of the

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