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PEST Analysis

BY: Mahmood Anwar


Aazir Hammad

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Environments
Internal:various
departments
Micro: suppliers,
marketing
intermediaries
Macro: competitive,
demographic,
economic, natural,
technological,
political, and cultural
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Major Forces in the Companys Macroenvironment

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Definition
A scan of the external macro-environment by
the firms management, in which the firm
operates can be expressed in terms of the
following factors:
Political
Economic
Social
Technological

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PEST analysis is very important that an
organization considers its environment before
beginning the marketing process.
In fact, environmental analysis should be
continuous and feed all aspects of planning.
The PEST analysis is a useful tool for
understanding market growth or decline, and as
such the position, potential and direction for a
business so that management can make strategies.
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The acronym PEST is used to describe
a framework for the analysis of these
macro-environmental factors. A PEST
analysis fits into an overall environment
scan in following diagram:
Environmental Scan

External Analysis Internal Analysis

Macro-Environment Micro-Environment

P.E.S.T 6
Political Factors
Govt. regulations and legal issues and define both formal and
Informal rules under which the firm must operate

Trade Political
Tax Employment Environmental Restrictions Stability
Policy Laws Regulations &
Tariffs

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Economic Environment
Economic factors affect the purchasing power of
potential customer and the firms cost of capital.

Economic Growth

Interest rates

Economic Factors
Exchange rates

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Social Factors

It include the demographic and cultural


aspects of the external macro-environment.
These factors affect customer needs and the
size of potential market. Some social factors
includes:

Health consciousness
Population growth rate
Age distribution
Career attitudes
Emphasis on safety
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Technological Factors
Technological factors can low barriers to
entry, reduce minimum efficient production
levels and influence outsourcing decisions.
Some technological factors include:

R&D activities
Automation
Technology incentives
Rate of technological change

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Environmental Scanning

Determine Environmental Areas That Need


to Be Monitored
Determine How the Information Will Be Collected
Implement the Data Collection Plan
Analyze and Use the Data in Planning

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Thank You
Any Questions????????

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