When analysing any macro-environment, it is very important to identify the factors which in turn may impact the variables that can influence an organisation’s level of demand and supply. Nowadays, there are many radical and ongoing changes evolving in society, that create uncertainties in the external environment and can directly influence the function of an organisation.

There are many marketing tools which aid organisations to assess the external environment in which they are doing business. One among these models is the PEST analysis.

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PEST analysis was introduced long time back by a Harvard Business School Professor, named Francis Aguilar. Over years, this marketing model has proven to be strong taxonomy to analyse the macro-environmental factors affecting business.

As per Kotler (1998), PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. PEST is a mnemonic, which in its extended form denotes P for Political, E for Economic, S for Social and T for Technological.

This taxonomy has served for quite a long time and recently, few factors (E for Environmental and L for Legal) have been added and the acronym has further developed to become PESTEL Analysis. These are the different factors which give a bird’s eye view of a business environment.

Amongst its many uses, PESTEL Analysis proves to be a very useful marketing tool as it assists companies to track down the business environment which is being targeted for their next project launch.

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