A PEST analysis focuses on analysing a firms external business environment and is composed of four main components:

1. Political environment

   • There are many political factors that can be analysed:

     • Tax laws

     • Stability of government

     • Type of political group

     • Consumer protection laws

2. Economic environment

• There are many factors that can be analysed:

  • Economic growth

  • Macroeconomic indicators

  • Inflation

  • Unemployment

  • Interest rates

  • Exogenous shocks

3. Socio-cultural environment

• There are many socio-cultural factors that can be analysed:

  • Population growth

  • Age of population

  • Cultural beliefs

  • Predominant religions

4. Technological environment

• There are many technological factors that can be analysed:

  • Automation

  • Research and Development

  • Innovation in technological space