PEST analysis
The STEP analysis (also known as PEST analysis ) is an English acronym for Sociological, Technological, Economic and Political Change ( to German: socio-cultural, technological, economic, political ).
The STEP analysis is a model of the external environment analysis, ie macroeconomics. The STEP analysis lists the factors of each category that may have an influence on the examined unit. Often it is used by companies to analyze a market and the market opportunities.
Assessment factors
Socio-cultural factors, values , lifestyle and demographic influences, distribution of income, education, population growth, security.
Technological factors include research, new products and processes, product life cycles, government research spending.
Economic factors are economic growth, inflation, interest rates, exchange rates, taxation, unemployment, business cycles, availability of resources.
Political factors include competition authority, legislation, political stability, tax policies, trade barriers, security policies and subsidies.
Between the individual factors, there are mutual dependencies, which means that a change in one area can also lead to changes in other areas. Thus, for example, technological changes have economic consequences or influence political decisions, the economic development. For each of the four factors mentioned above should in the STEP ( PEST ) analysis, the following questions are asked to identify the changes and the driving forces that bring about the change:
- What are the future trends might alter the demand and market behavior of our suppliers / our competitors?
- When will this be the time?
Extensions
Depending on the industry, it may be useful to expand the factors or further divide.
STEEP
STEEP (or PESTE ) is the extension of the STEP factors by a factor of environment ( to German: ecological). These are values such as waste disposal, emissions regulations or remediation or effects of the ozone hole and global warming.
PESTLE
In the PESTLE (also called PESTEL or LEPEST ) is added to the STEEP add the factor Legal, focuses particularly on legal aspects. These are usually integrated into the political factors, but may be listed as an extra factor also for better subdivision. This is therefore to factors of legislation, fiscal policies, competition rules and other legal factors. In return, the policy analysis more focused on stability, government organization, foreign relations.
Use
The STEP analysis should be carried out not only static, but should be completed within a maximum time space to detect changes and developments.
The analysis is carried out by companies who want to enter a new market, for example, a new country, to expand. In order to assess the risks, but also to consider opportunities that STEP can be a good help. The results are accordingly used for the external analysis of the SWOT analysis.