business affecting factors

PEST Analysis


I know about those factors who affect your work and business. You must have knowledge about these factors. So that these factors help you to run business as an entrepreneur or an employee. These factor categories as PEST or some time PESTEL. Like SWOT analysis to know about your business. PEST analysis is important to know about the factors who affect the business or work.

PEST is stands for …

P= Political Factors, E=Economical factors, S= Social Factors, T= technical factors

PESTEL stands for……

P= Political Factors, E=Economical factors, S= Social Factors, T= technical factors, E=Environmental factors,

L= Legal Factors

Most common term is PEST analysis. But some places it is considered as PESTEL. We cover environmental and legal factors under in other factors.

business affecting factors
Business Affecting Factors                     image source-www.visual-paradigm.com

What is PEST analysis?

PEST analysis is a method to get the information about all the factors, responsible to run a business. Most of the companies analyze PEST with SWOT analysis. Both are important. PEST analysis is a systematic, analyze, well defined method that gives the summarized report of all factors. Each and every factor gives the adequate information about the problem face in business. It also helps to find the method to solve it. PEST analysis not cover only the business area, it also covers the life of a person. Because these factors affect the life of a person like changing in government policies, climate change, change in technology and so on. To get rid and prepare for these factors must know about these factors.

Let’s discuss about these factors…….

P: – Political Factors

First letter “P” of PEST. P stands for political factors. Whole country works on rule and regulation. These rule and regulation mention in our constituency. All rule and regulation made and govern by the government. So, if any rule is change by the government its effect can be seen on the country.

Change in government policy and rule comes under political factors. Take an example, Indian government refuse to take old currency and launch new currency . And this decision makes a lot of disturbance in the market and among people too. This disturbance takes too long time to adjust. Some time new government change the rule followed by the previous government. Now comes to business, because of suddenly change in these rule, effects the working efficiency of business and the employees.

government policies
Government Policies           source- electronicsb2b.com

Change in tax policy and its tax rates change the value of product. Changing tax policies at small time interval disturb the business and associated worker. Before applicable GST (Goods and Service Tax), VAT is in existence. All works run on VAT process. Tax is filled once in the year. When GST is comes in existence, Tax is filled every month for large business and quarterly for small business.

Some trade restriction stops business to develop. Trade in specific area, or specific product. After some consequences government stop industries in Agra near the Taj Mahal. Himanchal Pradesh government restricts to establish the production company in state. This is so; they stop the bad effect on nature and tourism due to the companies. This is the bad effect for the business but good for nature and tourism.

SEZ Area
SEZ Area


it is (Special Economic Zone) is the area that defines by the government tax free, duty free and tariff free. Any business in these SEZ port or area is tariff free. This is so that the local people get the employment. Government policies setup by the government, beneficial for citizens of country. Decision making process is a lengthy process, considering all the issues and situation face by the citizen.

Working process of government

working process of government
working process of government   source- birac.nic.in

E: -Economical Factors

Second alphabet “E” of PEST. E stands for the economical factors. Economic factors are those factors, associated with any country economy. Economy based on income, living style, value of money and production etc. This is also depends on other factors.

Income level changes the buying habit of people. High income level increases the buying capacity. Also value of money decides the buying capacity of money. In India 2 or 3 decades ago; it is around 1990. How much candies you bought in 1 rupees? And how many candies now you can buy? The buying capacity and value of currency decrease.

factors of economy
factors of economy

This pandemic period, (corona period) unemployment increase in the market. People face money problem so buying habit decrease. Fashion and demand change continuously in market. Customer’s behavior changes product to product. That deviate production of a product. RBI (Reserve Bank of India) set rate of interest for the entire bank. Interest rate attracts people for loan. To control inflation and deflation government increase and decrease the rate of interest. So that money maintain in the market. Economic condition of a country change continuously. This happen in the entire world. Economy of other country also affects the market or economic condition of other country. Value of money of one country, exchange rate, product value etc. this helps in growth in economy. Now in today’s time period whole world is a market, we purchase anything from anywhere. This situation affects the economic condition of both countries.

S: – Social factors

Third word “S” of PEST. “S” stands for social factors. Our country divides in different social platform. Like area, growth rate, age, sex, education level, health and career etc. And these social factors also helps in business directly.

To target a particular group, business performs research process. This research helps to identify the targeted audience. Many businesses produce their products for a specific target or group. Any company manufactures toys. Company does research for the children, their demand and requirement. Produce desire toys and launch in market. What you think about the toys and their sale? Sales of toys increase.


social factors
social factors

As time passes, choice changes and other product attract peoples. So purchase behavior change as per the product launch in market. These changes attract the people on the basis of area and time. Imagine at the time of summer you sell the woolen clothes in plane area. In today time period’s people are conscious about their health and career. So some companies target those people by producing health product or giving opportunity of job on the basis of commission. An educated and mature customer takes decision on the basis of past experience.

Different social media platform are helps to interconnect people to each other. They share their views, thought and knowledge.

T: -Technological Factors

Fourth word “T” of “PEST”. T stands for the Technological factors. In this time periods we all are depends on technology. This technology not only affects the human being but business and the way of working also. New things evolve every day. Changes occur in the previous product and a new good and better product launch in the market. This signifies the change occurs in the market. Mobile phones or computer system is common in the market. How much and how many works you can do with mobile phone 2 or 3 decades ago? Only you can call, massage and some simple calculation. Now in today mobile you can do everything, even though you can use your mobile as computer. This can happen by the technology.

social media
social media engagement
Communication technique

This affects business too. The way of communication, presentation and status of companies change tremendously. We can communicate with our representative, hosting companies, subsidiary company directly through the internet. This is due to technology. For the purpose of research and development and creating new relationship technology plays an important role. You notice some time on you tube, question arrives for opinion. This is for the research purpose or building a relationship with you.

Market changes regularly. To get the information about the market change and analysis the changes, marketers develops marketing strategy. Strategy for targeting people, group, industries or so on. These strategies help business in transforming and make required changes. Changes like new machinery, working process, technology use, and online business so on. Mostly industries represent own selves online. They sales their products through a medium on internet. Rotation of goods like FMCG (fast moving and consuming goods) products protects from spoil and loss of owner. This all the effect of online marketing and shopping.

Rather than it, technology gives supports and security by encrypting data and other necessary information. We mostly use what’s app, telegram or signal, may be possible other software at the time of reading. They ensure us by policies of encryption of data. This way our data is safe.

Other factors: –

some other factors like environmental factors and legal factors make effects on the business.

      Environmental factors: – Temperature higher than normal, decrease the working efficiency of the worker. Uncomfortable conditions like pollution, lack of electricity, lack of air decrease the stamina of employees.

environmental condition
environmental condition

 Some time climatic condition and disaster like too much rain, blowing of air, flood, earth quack and tsunami destroys the lives in area and the industries. We can’t control these natural disaster and climatic condition. We can tries to control some climatic condition.

     Legal factors: – When an industries established, it passes through many process and fulfill many condition. Different types of license and permits are required for manufacturing unit. It consists of much information about the manufacturing process, product, chemical use and location of manufacturing unit. Business must follow the industries rule and regulation assigned by the government of India.

legal factors
legal factors

                  For the production of product, large number of labor is required. Business has passed the labor registration and the maximum number of the labor. These licenses are renewed every year. If there is any mistake, penalty is applies on the industries.

Analysis of factors

Factors and analysis helpful in run a business. These all factors can’t be neglected. They are important part research and regulation and run the business properly. Some time lack of knowledge bound you to so better than other. Without research and development and calculating these factors running a business like the building house in air. Any little mistake destroys your position. And to start from beginning a lot of energy required with money. So be careful. Read and understand the factors. Analyze them, because they help you in removing obstacles in your journey.

We read about different factors and effects. Many factors can be control easily and have positive effects. Lack of security and understanding creates bad effects on the business. Like improper knowledge of technology may release you data publicly. Demographic changes occur daily. Huge numbers of population travel here and there. This creates a bad effect of collecting data about the population, especially in particular area.


A large number of small businessmen finished their business in lack of information and guidance. Whenever they face some critical situation due to any cause mention above they dump their business. Either they start from starting or change their platform. No competition in the market. Small industries not survive in the market due to lack of resources. So must be produce easy and simple norm by the government. These factors are important in all aspect. Never neglect and avoid them. Also in R&D industries must include these factors. PEST analysis covers the working area, where we work. All these factors affect working area of industries.

Other content:-

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll Up