What is a PEST Analysis and How is it Applied?

PEST Analysis

Making the transition from domestic sales to foreign sales requires a comprehensive understanding of the international environment. In order to develop your export marketing plan, a great deal of research and analysis must be done prior to market engagement. This will ensure your company is aware of all the potential threats and opportunities posed by each potential foreign market. An effective way in which to approach this research is to perform what is known as a PEST analysis. 

What is a PEST Analysis?

Every country has its own unique differences, ranging from climates and languages, to economic and political systems. Each one comes with its own inherent threats and opportunities, which need to be analysed to create a clear picture of what is possible within the international environment. With the PEST analysis, we observe the international environment from a Political, Economic, Social and Technological point of view. 

Political Analysis

Every country and associated government has its own laws that dictate how business and private activity is conducted. Governments also come and go, sometimes voluntarily and sometimes as a result of force (military action). An important consideration when evaluating a country’s political environment is the country’s level of development, as it often dictates how stable the political environment will be, an important factor in the successful conclusion of your export transaction. 

PEST Analysis

Economic Analysis

Factors like the purchasing power of the average buyer, financial infrastructure, e.g. the reliability of the banking system in the transfer of funds, and disposable income should all play a part in your international marketing decisions. This analysis is essential to determining the financial viability of a foreign market.

economic analysis

Social Analysis

This takes into account all the customs, languages and traditions unique to the country or region. These affect communication, and may also influence product adaptations required in order to sell your products.

Technological Analysis

Access to, and development of, technology are arguably two of the most influential factors in our everyday lives. The level of sophistication in technological development varies greatly from country to country and will impact many of your international marketing decisions.

By using a research tool like the PEST Analysis, an aspiring exporter can paint a clear picture of potential opportunity and possible risks within the international environment. These insights will provide invaluable direction for your export marketing plan. On the topic of the international environment, there are many other important considerations, including the natural or geographic environment, all of which are covered in our free e-learning training course. Trade Forward Southern Africa, in collaboration with the International Trade Institute of Southern Africa has developed a comprehensive online training course which covers all aspects of the international environment and the export landscape. Click the links below to sign up for free and get started.

To sign up to the School of Export CLICK HERE.

If you already have a profile, CLICK HERE to login to begin the module.

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