ITPEC FE Morning October 2022 Question 67
PEST analysis is used to analyze the external environment in determining a business strategy. Which of the following is an appropriate set of external environmental factors that PEST analysis analyzes?
Explanation
Politics, Economics, Society, Technology — the four macro-environment factors a company cannot control but must plan around.
- •Politics: laws, regulation, taxation, government policy
- •Economics: growth, interest and exchange rates, inflation
- •Society: demographics, lifestyle, culture, values
- •Technology: new technologies, innovation, infrastructure
PEST looks outward at the macro environment, like the opportunities and threats half of SWOT, rather than at the company, its customers or its competitors.
Answer (a)
Why not others:
- •(b) — keeps Politics and Society but swaps Economics for Enterprises and Technology for Time
- •(c) — Price and Satisfaction are marketing and customer measures, not macro-environment factors
- •(d) — Price, Enterprises, Safety and Time: none of the four is a PEST factor
Key rule: PEST covers the macro environment only; a company's prices, customers and competitors belong to 4P, 3C or five forces analysis.
Business Strategy Management · AI-written, may contain errors
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