PEST is best used for market research and broader analysis of the business environment. PEST analysis focuses on the big picture and impacts on the overall business, market, and important decisions. However, the two frameworks are distinct and apply to different levels of business analysis. PEST and SWOT analysis are often used together to better understand the business environment. It also gives you the tools to forecast changes so you can grow your organization with those changes instead of working against them. By analyzing the market forces at play, the more strategic you can be in your planning and decision-making.Īdditionally, PEST analysis helps organizations strategically plan projects and initiatives so that you only focus on projects that have the greatest chance of success.
The more threats or risk factors in the market, the more difficult it is to do business. PEST is particularly useful for understanding the overall market environment. Mitigate risks and take advantage of opportunities to remain competitive.Identify what factors could change in the future.Understand current external influences on the business so you can work on facts rather than assumptions.The main purpose of PEST analysis is to understand what external forces may affect your organization and how those factors could create opportunities or threats to your business.
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