LE PEST C analysis:

LE PEST C is an acronym of Legal, Ecological (Environmental), Political, Economic, Socio-

cultural, Technological and Competitive factors of external environment of business. It has a direct
or indirect influence in the operation of business. The analysis of those factors of business
environment helps a business to make a wise decision consciously and logically for the benefits of
the organization. It is essential for a businessperson to analyze it, because the factors can either
create opportunities or threats for the business. Hence, to get a clear concept of external
environment and its probable future change and its associated impact leads to make a proper
business decision accordingly.

(1) Legal:
This refers to set of laws, regulations, which influence the business organizations and their
operations. Every business organization has to obey, and work within the framework of the law.
The important legislations that concern the business enterprises include:
Discrimination laws
Antitrust laws
Employment laws
Consumer protection laws
Copyright/Patent laws
Health/Safety laws
Ex.

(2) Ecological (Environmental):

The natural environment includes geographical and ecological factors that influence the business
operations. These factors include the availability of natural resources, weather and climatic
condition, location aspect, topographical factors, etc. Business is greatly influenced by the nature
of natural environment. For example, sugar factories are set up only at those places where
sugarcane can be grown. It is always considered better to establish manufacturing unit near the
sources of input. Further, government’s policies to maintain ecological balance, conservation of
natural resources etc. put additional responsibility on the business sector.

(3)