What aspect of industry analysis does a PEST analysis focus on?

A PEST analysis focuses on examining the external macro-environmental factors that can impact an industry or organization, specifically in terms of Political, Economic, Social, and Technological influences. This framework helps businesses understand the broader landscape they operate in and how these external factors can affect their strategic decisions.

For instance, political factors may include government policies and regulations that could influence operations, while economic factors encompass elements like inflation rates and economic growth that affect consumer purchasing power. Social factors consider societal trends and demographic changes that could alter market demands, and technological factors assess the impact of technological advancements and innovations.

Utilizing a PEST analysis allows organizations to identify opportunities and threats in their environment, which is crucial for effective strategic planning. This comprehensive view ultimately aids businesses in aligning their strategies with the dynamic nature of their external environment.