The concept of PEST analysis seems quite simple. Indeed, there are 4 components of PEST analysis such as political, economic, social and technological factors. It is difficult to say which factor plays the most important role in PEST analysis. It depends on the company, its mission and goals. It for one company technological factors play the most crucial role, the other company should pay the most attention to political changes and economic factors. It also depends on where the company wants to be in near and long term future. This is to say that PEST analysis is very often combined with strategic planning. However are, strategy implies both internal and external factors while pest analysis focuses mostly on external factors and company position and mission in external environments. Now lets analyze concepts of PEST analysis and its key components.
Every company, whether it is small business or a large corporation, is registered or operating in a certain country. Sure, the company may be registered in some exotic islands, while it is actually operating in a European country. Anyway, every company should take into consideration political factors. Why politics? How does it influence business environment? Politics seems to be only about people making statements and declaration which we see mostly on TV. However, every word articulated by a prominent politician may have very serious consequences for national and in some cases even international economy. Thats why analytical departments of major companies analyze statements of political leaders and their possible consequences for their particular business. Those who ignore and refuse to analyze political developments and news may pay a high price, because political constituent is very important in strategic planning. Political instability they result in economic changes and thus a chosen strategy w
ill simply not work. This argument takes us to economic factors.