External Business Environmental Scanning
PEST Analysis (Political, Economic, Social, and Technological) is a management method whereby an organisation can assess major external factors that influence its operation in order to become more competitive in the market. As described by the acronym, those four areas are central to this model. A variation on the PEST Analysis format is the PESTLE strategic planning approach, which includes the additional aspects of Legal and Environmental.
It is believed that PEST Analysis was first introduced under the name ETPS by Harvard professor Francis J. Aguilar. In the 1967 publication “Scanning the Business Environment,” Aguilar presented the economic, technical, political, and social factors as being major influences on the business environment. Subsequently, the letters were rearranged to create a convenient and quirky acronym used today.
Generally, it is more effective with larger organisations that are more likely to experience the effects of macro events. PEST analysis is commonly used in conjunction with SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats.
Albert S. Humphrey was an American business and management consultant who specialised in organisational management and cultural change. Initially earning degrees in chemical engineering in Illinois, he eventually moved to London.
Francis Joseph Aguilar (August 19, 1932 – February 17, 2013) was an American scholar of strategic planning and general management. He joined the faculty of Harvard Business School in 1964 and became a tenured professor there in 1971.
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