How to do a PEST analysis

The PEST analysis is used to analyze and describe a company's external conditions.

The PEST analysis is an analysis of the factors in the company's independent environment, and the model is suitable for highlighting opportunities and threats in the company's external conditions.

The analysis model is used especially when analyzing a new export market in order to assess the attractiveness of the market for the company. The PEST analysis is built around four factors:

Political (political)

Economical (economic)

Social (social)

Technological (technological)

Through the analysis, you can assess a market, including competitors, from a specific point of view or from a specific industry.

It can be advantageous to do a PEST analysis before doing a SWOT analysis, because PEST helps to identify the elements of SWOT. PEST and SWOT analyze from two different perspectives, but as I said, they can complement each other. (The SWOT template is also ready for use on Lederinsigt)

PESTEL analysis

The PESTEL analysis is a way of creating clarity about how developments in the environment affect the organisation's future possibilities.

PESTEL is an extension of the PEST analysis, and the addition of EL – E: environmental (environmental) L: legal (legal) allows the method to take into account these two areas, which in a few years have gained great importance for organizations.

• The environmental conditions include everything related to the environment and sustainability. It is more the rule than the exception that companies today have a CSR strategy and that environmental considerations are part of the vision and mission. It is therefore an important area to include in your analysis.
• The legal conditions include what can potentially affect the operating framework for the company. This can be, for example, employment conditions, health and safety for employees, insurance and laws on competition.

Download template for:

The PEST analysis