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For your orginisaton, it lets you know about whats happening outside your business. It helps identify hazards and if you know about the hazards you can put controls in place to protect your business. Its a good tool

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Q: Why is a PEST analysis useful as a marketing tool?
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What do the letters in PEST stand for?

PEST is a type of business analysis tool which analysis the market in which the business is operating. It involves considering: Political Economical Social Technological Sometimes this is extended to PESTLE where the L and E are: Legal Environmental. This mnemonic is sometimes rearranged as SLEPT but the tool is still the same.


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The Pest Analysis or Political, Economic, Social and Technological is a framework to analyze the external impact on an organization. For example, when I say conduct a PEST analysis on a small barber shop in town. Then we can say that in terms of Politics, government actions or laws can have an impact on the business. For example, the govt may increase tax for barbers around the town. In terms of Economics, we can say that the Purchasing Power or Income level in the area, can influence your business in terms of revenue or cost. You just need to know that PEST is a tool for analysis. It's called PEST, to simplify it and it's less burdensome on the memory. It's also important to know that in business, it's not the only tool for analysis. Others include SWOT. These models can also evolve or phrased differently, the latest one is called SPELT. Hope this helps. (cheong@bgymail.gd.cn)


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