Using P.E.S.T. in Data Collection



It has been suggested that companies that are not sure how to start a PEST analysis can do a competitor analysis. This would involve analyzing the competitor’s data and understanding what their selling points, challenges, and needed areas of improvement are. Information gathered through this type of research helps businesses identify a point market entry (Frue, 2017).

Collecting data on the political environment involves identifying government regulations and industry rules that affect an organization’s ability to be successful and profitable. This includes laws to which an organization already adhere to, as well as laws that may apply to them in the future. Businesses should assess the potential impact of adhering to these laws.

Analyzing external economic factors give an organization insight into the possible challenges their business will face and gives them the opportunity to find solutions to these challenges. Market trends, inflation rates, exchange rates, taxes, economic growth, and employment rates all impact the future performance of a company. A company may ask, ‘What will be the cost of hiring experienced, skilled workers?’ Being able to build a skilled workforce is vital to a company’s success.

Analyzing social factors tells an organization what influences consumer purchases, the needs of consumers, and what drives their purchases. This information not only provides an organization with information such as the potential size of a market but from an HR standpoint what the local workforce looks like and under what conditions they are willing to work. Demographics may also influence the type of benefits an organization provides, whether it be fitness classes in a health-conscious environment or enhanced retirement benefits for an older demographic.

Finally, analyzing technological factors helps an organization to understand how technology impacts their business on a day-to-day basis. Understanding the rapid rate at which technology changes or becomes obsolete, consumer appetite for new technology, how technology affects the ability to retain employees, and the productivity of employees can all be achieved through analyzing the technological environment of an industry. One question a company may want to ask is, ‘Do any of my competitors have new technology that is redefining the industry?’ It is important that organizations are prepared to respond to changes in technology.


SWOT and PEST analyses are essential parts of the strategic planning process. They help managers understand the business environment in which they operate so that they are able to position their organizations for the best performance possible. SWOT-analysis helps managers discover the strengths and weaknesses of their organizations as well as the threats and opportunities that are presented by the external environment. PEST analysis focuses on external factors that have a major impact on how organizations make decisions, expand their business, and increase market growth.