Who Invented PEST Analysis?

In a book entitled "Scanning the Business Environment" published in 1967, Harvard professor Francis Aguilar included a scanning tool called ETPS, the forerunner of PEST analysis. PEST analysis is an acronym for Political, Economic, Social and Technological analysis.

PEST analysis is a tool that is often used by businesses to understand their business environment better. It is useful in four different areas.

  1. It provides advance warning of significant threats and helps spot opportunities.
  2. It brings to light factors beyond a business's control that make a project likely to fail, thereby helping the business avoid wasting resources and time starting the project.
  3. It reveals the direction of change within a particular business environment, allowing businesses to plan ahead and cater to changes when they happen.
  4. It helps businesses entering new markets develop an objective view and break free of any assumptions.

PEST analysis has been expanded by some analysts to include legal and environmental analysis. The acronyms for these are SLEPT for the former and PESTEL or PESTLE for the latter. More detailed version of the scanning tool includes ethics and demographic factors, and are shortened to STEEPLE and STEEPLED respectively. All versions of the tool are used as a part of market research, giving a company a detailed overview of the different factors it needs to consider when entering a new market.