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Pest - an Overview

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PEST is an acronym for Political, Economic, Social, Technological - the categories into which a compound business environment is broken up for analytical ease. It is a strategic planning tool for gaging the various factors in a potential business environment to estimate its suitability for the enterprise at hand. Therefore, let's take a look at all these building blocks of a business environment separately.

Political environmentrefers to all those things pertaining to and perpetrated by the government that affect the economy and business scenario in general. Government regulations and policies that impact the business environment the most may include trade and labor laws, tax policies, environmental laws and regulations, trade restrictions, commercial tariffs, infrastructure and development policies, etc. The degree of political stability also has a huge impact upon business environment and the economy in general.

Economic environmentrefers mostly to the macroeconomic factors as these factors may have a high impact upon the business environment but a firm does not have any control over them. The most it can do is modify its business strategies and various commercial and financial policies accordingly to make the most of the economic situation at hand. These economic factors may include the currency exchange rate, interest rate, economic growth rate, rate of inflation, etc.

Social environmentrefers to the social, religious and cultural aspects of the business environment that may be affected by, and may react to, the firm's transitional strategies either positively or negatively. These may include demographic aspects like age distribution, population growth rate, employment and income statistics, education and career trends, religious beliefs and social stigmas, overall general attitude (conservative or liberal), etc. These factors may have a huge impact upon

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