When making a PEST analysis chart, you'll want to examine several external factors that may influence business operations and decision making, then classify these factors into four distinct buckets: policitcal, economic, social, and technical.
- Political factors are essentially how and to what degree a government's policy will impact a business's operations and decisions. Political factors include tax policy, labor law, environmental law, trade restrictions, regulations, tariffs, and political and economical stability. Governments have great influence on national infrastructure and the general education of the population as potential employees and customers.
- Economic factors are local, national, and international economic conditions that can influence a business's operations and decisions. Economic factors include economic growth, interest rates, taxes, consumer confidence, exchange and inflation rates.
- Social factors include lifestyle trends such as health consciousness, population growth rate, age distribution, career attitudes, and ethics. Trends in social factors also affect the demand for a business's products and how that business operates.
- Technological factors include R&D activity, licensing and acquiring patents, available research funding, communications, automation, technology incentives and the rate of technological innovation. Technological factors may determine barriers to entry, minimum efficient production level, and influence outsourcing decisions. Shifts in technology and advances may affect costs, quality, and overall innovation.