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1.5 External Environment

What is the PEST analysis?

•A PEST analysis of an audit of the external environment of a firm.

•External influences are outside of the control of the firm

•It involves trying to identify any potential Opportunities or Threats that the firm may be presented with

Political

•How and to what degree a government intervenes in the economy. Specifically, political factors include areas such as:

•Tax policy (Consumer and Corporate)

•Employment & Environmental Law

•International trade restrictions

•Competition legislation

•Consumer protection Law

•Government attitude and procedures

•Political stability

Social

•Income Distribution

•Demographics (Age, Gender, Family Size, Occupations)

•Social Mobility

•Lifestyle

•Attitudes to Work and Leisure

•Fashions and Fads

•Attitude to work

•Living conditions

Economic

•Economic Growth

•Monetary Policy (interest rates)

•Government Spending

•Unemployment

•Exchange rates

•Inflation

•Trade Cycle

•Consumer Confidence

Technological

•Government spending on research

•R&D activity

•Speed of technology transfer

•New discoveries

•Rates of obsolescence

•Energy use and costs

•New materials

•Developments and availability of ICT

•Internet

STEEPLE Analysis for a 20 Mark Question

Created by: ADGV ('19) & ValkrieJJ ('19)

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