What is PEST Analysis?

In this article, we answer what is PEST analysis?. PEST stands for Political, Economic, Socio-cultural and Technological.  Created by Harvard professor Francis Aguilar in his 1967 book, “Scanning the Business Environment.” PEST helps you see the “big picture threats and opportunities”.

PEST Analysis has a brother, and they are work often together. SWOT analysis works well with PEST analysis. But while PEST focuses on influential factors within a decision, a market, or a potential new business, SWOT takes a look at these factors at a product and business level. In the UK it is usually called STEP, but you will also see it called STEEP or PESTLE analysis. 

Big picture threats and opportunities

Other extended remixes of the original tool and the definitions shown at the bottom of this article. Back to the basics. So a PEST analysis takes a look at your external business environment to enable to you examine the impact and relationships of these factors on your business activities. And changes in the business environment will create fabulous opportunities but can also develop into significant threats.

Winds of change

STEP isolates the winds of change in your business environment, to help understand what you’re doing and how you can take advantage of change. Usefully, STEP will hopefully stop you working on a project that is more than likely fail. Because STEP allows you to develop an objective view of the future environment, it will show any unconscious assumptions when expanding into a new market, country, region. Put simply, use STEP while building your strategic business plans. And the results help you identify and take advantage of any opportunities, as well as, to make robust and timely plans against threats.

How to STEP

Follow these steps to analyse your business environment and the opportunities and threats that it presents.

  1. Brainstorm the changes using the PEST factors which could be happening in your environment
  2. List the opportunities which may come each of these changes
  3. Then look at the associated threats or problems
  4. Take action


In this article, we answered the following question. What is PEST analysis? PEST stands for Political, Economic, Socio-cultural and Technological. Therefore, PEST helps you see the “big picture” threats and opportunities.

Other types of STEP

It would be wise to get to know PEST first, but these are the different versions of PEST Analysis which bring other factors into the analysis, including:

  • PESTLE/PESTEL: Political, Economic, Socio-Cultural, Technological, Legal, Environmental
  • STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical
  • PESTLIED: Political, Economic, Socio-Cultural, Technological, Legal, International, Environmental, Demographic
  • SLEPT: Socio-Cultural, Legal, Economical, Political, Technological
  • LONGPESTLE: Local, National, and Global versions of PESTLE
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