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Assess potential risks = success for your business in 2022: pest analysis with examples

Pest analysis with example: we will tell and show how to assess the possible risks and solve them. Read to the end to learn about the updated pest analysis framework from CITY PROFIT.

table of contents - pest analysis
what is pest analysis
table of contents - pest leed analysis
article about pest leed analysis

Table of Contents

Where did pest analysis come from in business?

Every business, company or organization has its own environment, which consists of three main levels: internal environment, micro environment and macro environment. Let’s take a brief look at each of these levels.

The internal environment

Consists of those factors that are undoubtedly part of the internal work of the organization – employees, assets and company technology, and so on.

Microenvironment

Is the next level, consisting of such factors that outside the company, but they are still very closely related to the company, so these are things like suppliers, buyers, competitors, and subcontractors.

Macro environment

Is the final level, and these are factors that can influence the organization, but the organization itself has no control over these factors, so these are political factors, economic factors, social factors, and technological factors. And these are the factors that a pest analysis will examine.

What is the benefit of pest analysis?

Pest analysis helps us to evaluate the attractiveness of the larger global environmental in which that industry operates. PEST analysis involves scanning different macroeconomic factors to understand long-term trends. From this, you can understand how these trends might impact on your business, Pest analysis helps you avoid macroeconomic data overload by deciding what factors are most important to your business. And by better understanding what’s happening in the world around you, you will be able to make better decision. And we can show for you in the pest analysis with example.

pest analysis with example

A PEST Analysis is best suited for whom?

PEST analysis is useful for any business that needs to assess current and future risks, especially if it is a start-up business that only plans to open a business space and start its own business. Mostly in companies this is done by senior management, but there can also be business consultants, people involved in strategic planning and so on. But if you are the owner of a future business, you should not delegate it to someone, do pest analysis with examples to understand the future prospects and risks, and make the best decisions. 

Before you start working on your business project, it is important to go through all the possible risks. What is it for? To reinsure in the future, to strengthen your business, to understand the opportunities and risks. 

Read more next about pest analysis with example.

business team doing pest analysis

PEST LEED analysis or PEST analysis with example?

As we discussed above, each letter of the word means some kind of risk. We offer you a slightly wider version, so we tell you about pest analysis with example with the «leed».

P – political risks

E – economical risks 

S – social risks 

T – technological risks

L – law-related risks

E – ecological risks

E – educational risks 

D – demographical risks

So, let’s move on to pest analysis with example.

pest leed analysis political risks
political risks - pest leed
pest leed political
pest analysis political
pest analysis - political risks

1) Pest analysis with example: political risks

Factors with a political or political motivation that could have an impact on the organization.

About: Political stability or instability, bureaucracy, corruption, rules governing competition, tax and trade policy, trade restrictions, relations with other countries.

Example: You want to sell goods that are imported from another country, let’s say it will be China. And here the government decides that a ban on the import of any goods from this country, because of unstable contractual situation between the countries. This is a political risk.

How to solve it: Look for an alternative when deciding where to import the product you are going to buy. You should always have a “just in case” option.

pest leed analysis economical risks
economical risks pest analysis
pest - economical
economical risks pest leed
pest analysis - economical risks

2) Pest analysis with example: economical risks

Overall economic forces that could impact on your success.

About: Exchange rate, inflation, taxation, lending, world trade, wages, consumer income.

Example: You can’t make a profit, because at least you buy a product more expensive than you sell it. That is, you either have a very bad or unregistered financial model.

How to solve it: Deal with a good economist and write a well-thought-out and extensive financial model.

pest leed analysis social risks
pest analysis social risks
pest leed analysis social risks
social risks pest analysis
social risks pest leed analysis

3) Pest analysis with example: social risks

Social attitudes, behaviors, and trends that impact on your organization and target market.

About: Lifestyle trends, problems “on time”, society’s attitude to problems “on time”, social beliefs.

Example: You open a cafe in a small town or village, where, of course, all people know each other. And as soon as you open up, block the way to some “local authority”, you are rumored about poor service and bad food. This is a social risk.

How to solve it: Open up where you won’t disturb anyone, and stand in neutral territory for everyone.

pest leed analysis technological risks
technological risks pest leed analysis
technological risks pest analysis
pest leed analysis technological risks
pest analysis technological risks

4) Pest analysis with example: technological risks

Technology that can affect the way you make, distribute, and market your products and services.

About: Competitors’ technologies and developments, process automation, technological incentives, consumer access to technologies, technological infrastructure.

Example: You opened a grocery store in the center of the city, and put only one cash register and one cashier in the hall. More and more people come to you, and you do not have time to serve them with one cash register. This is a technological risk.

How to solve it: Think before about the importance of fast customer service, open an additional cash register with a cashier and a self-service cash register.

pest leed analysis law-related risks
pest leed analysis law-related risks
pest analysis law-related risks
law-related risks pest leed analysis
law-related risks pest analysis

5) Pest Leed analysis: law-related risks

Legislation that can affect you, both the business owner and the business as a whole.

About: Laws relating to all risks: both environmental and economic (establishment of the state budget), laws whose adoption affects society, effective or ineffective regulation of urgent social problems.

Example: You are selling a product, and you have a “return” function. But due to the fact that you did not take care of the legal risk, and did not prescribe in the contract the terms of return of goods to consumers, you now have a return rate of almost 10%, which destabilizes income. This is a law-related risk.

How to solve it: Get advice from a lawyer, prescribe in the contract the terms of return of the goods, and do it in accordance with applicable law.

pest leed analysis ecological risks
pest analysis ecological risks
pest leed analysis ecological risks
ecological risks pest analysis
ecological risks pest leed analysis

6) Pest Leed analysis: ecological risks

Environmental change, global climate change that may affect your business.

About: Climate problems, their solution at the local level, the possibility of their impact on you and your business, the implementation of environmental protection.

Example: You are the owner of a factory, and according to the scope of your business, whether it is the production of cars, you exceed the limit of CO2 emissions. This is an ecological risk.

How to solve it: Buy CO2 emission limits where it is possible.

pest leed analysis educational risks
pest analysis educational risks
educational risks pest leed analysis
pest leed analysis educational risks
educational risks pest analysis

7) Pest Leed analysis: educational risks

What educational issues can catch your business.

About: Offline and online learning, the opportunity to learn, access to educational technologies, the level of knowledge gained.

Example: You are a great SMM specialist who is well versed in this area in the field of Instagram. You have a lot of clients, a project and orders, you have a good salary, and you still work for yourself, but you don’t even start to learn about SMM in other social networks. And here Instagram is blocked or simply deleted forever, and now no one needs your services. This is an educational risk.

How to solve it: Always learn something else in parallel, and acquire skills in various fields. Or pump your own competencies in your field in other technologies.

pest leed analysis demographical risks
pest leed analysis demographical risks
pest analysis demographical risks
demographical risks pest leed analysis
demographical risks pest analysis

8) Pest Leed analysis: demographical risks

Demographic factors that can on your organization or business.

About: Population growth and demographics, immigration/emigration, family size/structure.

Example: You have opened a coffee shop and all the people in this city come to you for coffee. But you did not calculate this before, did not think that it could happen that all residents will become your customers, you did not plan to open another coffee shop. This is a demographic risk.

How to solve it: Make a note in the action plan for the future about serving all possible customers, and about the future expansion of your own network of coffee shops, and what you need for this.

PESTEL as a Tool

External Analysis of PESTEL Analysis as a Framework

PESTEL Analysis

About PESTEL - one of the interpretations of Pest Analysis

Tips for effective use of Pest Leed Analysis

Use Pest Leed in full force

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Pest Leed Analysis Specialist 80%
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pest analysis tips

This is the easiest way to get the most useful information for you. Pest Leed Analysis has many factors, and you have no limits at all on how deep you can dive into their analysis. However, if your organization offers a digital product, do you need an equally detailed analysis of environmental and technological risks? Probably, the second will be more valuable, and it is worth paying more attention to them.

Sometimes people just did and forgot. And if you already do such an analysis, then in fact you already have one of the business tools and business designers for your business strategy. Therefore, it is necessary to take it seriously, make such an analysis and use it.

Make your own predictions about the future, as well as use data that represent changes (for example, the social mood of the population over the past year).

Remember that the effective application of Pest Leed Analysis is impossible without other tools that we recommend using for your business. Read about all 10 tools here.

The CITY PROFIT team can help you with the assessment of the PEST Analysis, as well as provide a more detailed consultation on the PEST LEED Analysis. The first consultation is free.

Hunting for new keywords by seo team

FAQ: Pest Leed Analysis

Start using the Internet to the fullest. You can find a lot of statistical data on the publicly available global Internet. The key is to know what to look for, and to look extensively.

Look for everything, but dig into what matters most to the business you’re running.

  • It’s a simple framework.
  • It facilitates an understanding of the wider business environment. 
  • It encourages the development of external and strategic thinking. 
  • It can enable an organisation to anticipate future business threats and take action to avoid or minimise their impact.
  • It can enable an organisation to spot business opportunities and exploit them fully.

PEST analysis is concerned with the large picture and how many factors may affect the market, the whole industry, and crucial choices. Market research and more thorough analyses of the business environment are where PEST is most effective.
SWOT analysis, on the other hand, focuses more intently on the organization itself to pinpoint its advantages, disadvantages, opportunities, and threats. A SWOT analysis is frequently performed to assess a product line or at the start of a new project.