By understanding the environment in which the company operates (external to the company), advantages of the opportunities can be taken and the threats minimized.
Specifically the PEST or PESTLE analysis is a useful tool for understanding risks associated with market growth or decline, and as such the position, potential and direction for a business or organization.
A PEST analysis is a business measurement tool, looking at factors external to the organization. It is often used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and threats analysis).
PESTLE is an acronym for Political, Economic, Social, Technological, Legal , Environment factors, which are used to assess the market for a business or organizational unit. The PEST analysis headings are a framework for reviewing a situation, and can also be used to review a strategy or position, direction of a company, a marketing proposition, or idea.
It is important to clearly identify the subject of a PEST analysis (that is a clear goal or output requirement), because an analysis of this type is multi-faceted in relation to a particular business unit or proposition - if the focus is dilute ...