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PEST Analysis

Presented by:
David Ng
What is PEST Analysis?

• This analysis is essential for an organization


before beginning its marketing process
• Consists of internal environment and
external environment

When to use PEST
analysis
• Use a PEST analysis when you’re
considering any one of these options:
üEntering a new market
üLaunching new product or service
üConsidering a potential acquisition
üInvestigating a potential partnership
üExamining an investment opportunity
Break up of PEST

• Political Factors
• Economic Factors
• Socio Cultural Factors
• Technological Factors

Political Factors
• This is the most important influence on the
regulation of any business.
– How stable is the political environment?
– Influence the Government Policy / Law on
your business
– Government’s position on Marketing Ethics
– Government’s policy on the economy
– Government’s view on culture under
religion

Political Factors -
Contd.
– Political System is responsible for Law
Making.
– Immediate laws which affect any business in
general are Central Excise, Sales Tax/
VAT, Corporate Income Tax, Personal
Income Tax & Service Tax
– Environmental Protection Law
– Controls if any on Marketing Strategies
• Like Marketing / Advertising of
Cigarettes, Tobacco, Alcohol etc.

Political Factors -
Contd..
• Control on Pricing
– like sugar, drugs etc.
• Government Policies on the Economy
– Role of Public Sector
– Role of Private Sector
– Role of Joint Sector
Economic Factors

• Government outlook towards


– Bank Financing
– Interest Rates
– Exchange Rate Mechanism
– Incentives for Exports
– Restrictions for Imports
– Inflation
– Labour Policies

Economic Factors -
Contd.
• Level of Government Spending
• Avenues for Capital Creation
– Size of the Capital Market
– Role of the Regulator
– Type of the Instruments
– Nature of the Investors
Economic Factors -
Contd.
• Business Cycles
• Monsoon
• Energy Availability
• Cost of Energy

Socio-Cultural Factors

• Demographics
• Distribution of Income
• Social Mobility
• Life Style Changes
• Consumerism
• Educational Levels


Socio-Cultural Factors
- Contd.
• Demographics & Distribution of Income
– Division of population - Male / Female
– Age Group of the Population
– Disposable Family Income
• Disposable Income in the hands of the
different Age Groups
• Education Level of the Age Groups




Social Cultural Factors -
Contd.
• Life Style Changes & Consumerism
– Attitude to living
• Different Age Groups
• In tune with available disposable income
• Thrust on taking care of present needs by
spending than saving for the future.
• Joint living and nuclear families
• Availability of various media tools
• Reach of the media to the population
Technological Factors

• Advantage of Technology
– In terms of Economies of Scale
• New Discoveries & Innovations
• Speed & Cost of Technology Transfer
• Rate of Obsolescence

PEST analysis-Mobile Phone
Company
Political Economic
Highly regulated Expensive 3G/4G license
Socio-cultural Technology
Laws Competitors
Ubiquity Mobile broadband
Infrastructure Reduced call cost
Health concern 3G
Ban on mobile use for certain
Demographic Economic downturn
GPRS/WAP

situations
Cultural trends Developing countries
SMS/MMS
Social networking coverage
Other Factors

• Judicial System
• Insurance System
• Banking System
• Regulatory System
• Infra Structure
– Communication
– Transportation
Role of PEST

• Helps Assess the market including


Competitors from the stand point of a
Particular Business.
• PEST is relevant for any type of Business
large, small & medium.