PEST analysis is an analysis of the macro environment, which refers to all macro factors that affect industries and enterprises. When analyzing macro environmental factors, different industries and enterprises will have different specific contents of analysis according to their own characteristics and business needs. Generally, the four major categories of external environmental factors that mainly affect enterprises, namely politics, economy, society and technology, should be analyzed.
(I) Political environment
The political environment includes the political system, system, policies, laws and regulations of a country or region. These factors often affect the business behavior of enterprises, especially the long-term investment behavior of enterprises.
(II) Economic environment
The economic environment mainly includes macro and micro aspects. The macroeconomic environment mainly refers to the population size and growth trend of a country, the national income, gross national product and its changes, and the level and speed of national economic development that can be reflected by these indicators. The microeconomic environment mainly refers to the income level, consumption preference, savings, employment level and other factors of consumers in the area where the enterprise is located or served, which directly determine the current and future market size of the enterprise.
(III) Social environment The social environment includes the educational level and cultural level, religious beliefs, customs, values, and aesthetic views of the residents of a country or region. The cultural level will affect the level of residents’ needs; religious beliefs and customs will prohibit or resist the conduct of certain activities; values will affect residents’ recognition of organizational goals, organizational activities, and the organization itself; and aesthetic views will affect people’s attitudes towards the content, methods, and results of organizational activities.
(IV) Technological environment
In addition to examining the development and changes of technical means directly related to the activities in the field in which the enterprise is located, the technological environment should also promptly understand the country’s investment and support priorities for scientific and technological development, the development trends of technology in certain fields and the total amount of research and development expenses, the speed of technology transfer and technology commercialization, patents and their protection, etc.