mingyao743/make-rational-decision/pest-analysis

PEST Analysis

A macro-environmental scanning framework that examines four external factor categories: Political, Economic, Social, and Technological.

When to Use

• Market entry or expansion decisions
• Strategic planning and environmental scanning
• Industry analysis and competitive landscape assessment
• Risk assessment for new investments
• Long-term forecasting and scenario planning

The Four Dimensions

P — Political Factors

Government actions and regulatory environment that affect the subject.

• Regulations and compliance requirements
• Trade policies, tariffs, and sanctions
• Political stability and government transitions
• Tax policies and incentives
• Labor laws and employment regulations
• Industry-specific legislation

E — Economic Factors

Macroeconomic conditions that influence costs, revenues, and market dynamics.

• GDP growth and economic cycles
• Interest rates and inflation
• Exchange rates and currency stability
• Consumer spending power and unemployment
• Cost of capital and investment climate
• Supply chain economics

S — Social Factors

Demographic and cultural trends that shape demand and workforce.

• Population demographics and growth rates
• Lifestyle trends and consumer behavior shifts
• Cultural attitudes and social norms
• Education levels and workforce skills
• Health and wellness trends
• Public opinion and media sentiment

T — Technological Factors

Technology developments that create opportunities or disrupt existing models.

• Emerging technologies and innovation cycles
• Automation and digital transformation trends
• R&D investment levels (public and private)
• Technology infrastructure maturity
• Cybersecurity and data privacy technology
• Disruptive innovations on the horizon

Process

1. Define the scope and timeframe

• What subject are you analyzing? (company, product, market entry)
• What timeframe? (1 year, 3 years, 5 years)

1. Scan each dimension (research-based, not brainstorming)

• Gather data from industry reports, news, government sources
• List observable trends, events, and conditions
• Focus on factors that are changing or likely to change

1. Assess impact and likelihood

• For each factor: What is the potential impact (high/medium/low)?
• What is the probability of occurrence?
• Is the effect positive (opportunity) or negative (threat)?

1. Prioritize

• Highlight the top 3-5 factors with highest impact × likelihood
• These become key inputs for strategic planning

1. Connect to action

• How should the strategy adapt to these factors?
• What monitoring is needed for high-uncertainty factors?

Output Format

## PEST Analysis: [Subject]
**Timeframe**: [Period]
 
### P — Political Factors
| Factor | Impact | Likelihood | Effect | Implication |
|--------|--------|------------|--------|-------------|
| [Factor] | High | Medium | Threat | [What it means] |
| [Factor] | Medium | High | Opportunity | [What it means] |
 
### E — Economic Factors
| Factor | Impact | Likelihood | Effect | Implication |
|--------|--------|------------|--------|-------------|
| [Factor] | High | High | Threat | [What it means] |
 
### S — Social Factors
| Factor | Impact | Likelihood | Effect | Implication |
|--------|--------|------------|--------|-------------|
| [Factor] | Medium | High | Opportunity | [What it means] |
 
### T — Technological Factors
| Factor | Impact | Likelihood | Effect | Implication |
|--------|--------|------------|--------|-------------|
| [Factor] | High | Medium | Threat | [What it means] |
 
### Key Findings
1. [Top factor 1 — dimension, impact, action needed]
2. [Top factor 2 — dimension, impact, action needed]
3. [Top factor 3 — dimension, impact, action needed]
 
### Strategic Recommendations
- [Recommendation based on PEST findings]

Extensions

• PESTEL: Adds Environmental (carbon regulations, sustainability) and Legal (intellectual property, consumer protection) as separate dimensions
• STEEPLE: Adds Environmental, Legal, and Ethical dimensions

Extensions

This skill is enhanced by the following shared extensions:

• `_shared/research-protocol.md` — Essential for PEST; provides source hierarchy, validation checklist, and data collection report format
• `_shared/skill-workflows.md` — Workflow 2 (Strategy Chain) uses PEST as the first step to scan macro environment
• `_shared/examples-library.md` — Example 5 shows a complete PEST analysis with data sources

Rules

• PEST analyzes external factors only — internal capabilities belong in SWOT
• Each factor should describe a trend or change, not a static condition
• Evidence and data sources should be cited where possible
• Avoid speculation — distinguish between observed trends and predictions
• Regularly revisit as macro conditions change