PEST Analysis (political, economic, social and technological) is a management tool used to assess external factors influencing an organization's operations in order to remain competitive. A popular variation of PEST, PESTLE, also takes legal and environmental factors into account.

Francis Aguilar, a professor at Harvard University, invented PEST Analysis. This was originally a scanning tool known as ETPS, which first appeared in the 1967 book "Scanning the Business Environment." As the years went, the name was transformed into the acronym we know today.

The PEST analysis can assist in determining whether a particular nation or area has the potential to produce lucrative business. Any market has the potential to be profitable or unsuccessful, and analysis aids in weighing the pros and cons and determining how the decisions your business makes or the path it wants to take fits in with the very real influencing aspects of the outside world.

A PEST Analysis should incorporate social factors such as workplace and lifestyle trends, cultural attitudes, demographics and age distribution. These factors help in studying population growth, age distribution, career attitude, etc. hence, gauging the potential size of the market.

1. It has an easy framework.
2. It makes it easier to comprehend the larger business environment.
3. It promotes the growth of analytical and strategic thinking.
4. It can help a company foresee potential business threats and take precautions to avoid or lessen their effects.