PESTLE Analysis/PEST Analysis

PEST analysis stands for "Political, Economic, Social, and Technological analysis“. Some analysts added Legal and Environmental factors
expanded it to PESTEL or PESTLE.

Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as
tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and
services which the government wants to provide or be provided (merit goods) and those that the government does not want to be
provided. Furthermore, governments have great influence on the health, education, and infrastructure of a nation.

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how
businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business
grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy

Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and
emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an
aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change
various management strategies to adapt to these social trends (such as recruiting older workers).

Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological
change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore,
technological shifts can affect costs, quality, and lead to innovation.

Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially
affect industries such as tourism, farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is
affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect
how a company operates, its costs, and the demand for its products.
 PEST Analysis of Animal Health Insurance Industry
(Example -1)

Enhancing Consumer Awareness

 California’s lawmakers have forwarded a bill requiring Impact of Recession
transparency in pet insurance coverage. The bill, has
passed the State Assembly and is moving through the  Recession did not majorly impact the pet insurance
Senate, would require insurance company web sites to industry. The total premium collected in USA in
clearly state benefit schedules, coverage limits and 2009 was USD 330 million a 21% increase in
exclusions. comparison to 2008. This was due the existing
This would enable the pet parents to have a better customers not wanting to incur heavy medical
and clear understanding of the insurance and may expenses in an uncertain time.
result in higher pet insurance purchases.
State Licensing
 The pet insurers operating is USA require license from
every state if they have to market their policies there.

Enhancing Online Experience

 Most pet Insurers are using upgraded websites
to enhance the insurance purchase experience.
Emotional Bonding Pets First initiated the process with its online
portal but others such as the Hartville Group and
 Most of the pet owner have an increased attachment Pets Best have added some functionality such as
towards their pets. Research conducted by the being able to change addresses and billing, as
American Veterinary Medical Association well as keep up with the claims process online.
The objective is to keep things easy and simple
demonstrated that 76% of pet owners would spend
for the pet parents and to reduce the cost
any amount to keep their pets alive.
incurred on call centers due to incoming calls.

Technological Advancements in pet health care

Technological advancements have brought services like radiation therapy, and
chemotherapy to the pet health care segment. This has led to not only increased
capabilities to treat pets but have also resulted in higher pet health care cost.
PEST Analysis of Food Services Industry
(Example -2)

 US: Federally run programs such as National School Lunch Programs represent a significant business
opportunity for the foodservices sector. The level of outsourcing in the primary education sector is expected
to increase by 10-12% by 2013 from the current level of 30-35%.

 India: The government’s Mid-day Meal Scheme, which provides lunch to school children across the country is
being considered as a future business opportunity by players like Sodexo who are increasing their presence in
the emerging markets. This segment, however, remains an untapped one as it currently being served either
through in-house facilities or local, small players.

 Healthy Food: With the growing Political  US: Following the economic
emphasis on employee health recession, higher unemployment
and welfare, food service rates, reducing meal subsidies
suppliers and companies alike and the rising cost of food prices
are slowly replacing foods with have acted as growth
Transfat content with fresh constraints for the foodservices
organic produce. Social Economical
industry in the US.
 Take-home Meals: Taking into  Europe: Food prices in Europe,
account the long work hours of especially in the UK where the
employees, organizations are food price inflation (in 2009) was
also collaborating with food almost 4 times as much as that
service companies to provide Technological in the rest of Europe, is
healthy take-home meals to significantly impacting the cost
their employees. structure of suppliers. This is
 Software Tools: Both food service suppliers and end-users such as leading to lower subsidies for
B&I organizations and educational institutions are increasingly employee meal programs and
implementing software solutions for automated inventory higher project costs for
management, menu planning, nutrition analysis, cashless companies.
transactions, etc. to provide a greater deal of visibility into the
category spend.