Help Manual


Sigma Magic Help Version 17

PEST Analysis


PEST (Political, Economic, Socio-Cultural, and Technological) analysis considers the different macro-environmental factors that may impact the company and affect its market growth or decline, business position, etc. It is usually done during an external analysis or market research.
  • Political factors are how the government intervenes in the economy through tax laws, labor laws, environmental laws, trade restrictions, etc. It can also include political stability and the impact of any governmental changes on the company. Governments usually have a high impact on a nation's health, education, and infrastructure, and any increase or decrease in government spending can impact the business.
  • Economic factors include economic growth rates, interest rates, exchange rates, inflation, etc. These factors can influence how a business operates and makes decisions. For example, currency exchange rates and customs duty structure may impact the company's decision to make a product within the country or import it elsewhere.
  • Social factors include the population growth rates, age distribution, attitudes of the people, health consciousness, emphasis on safety, and will change from region to region. By understanding these factors, a company can leverage them to its advantage.
  • Technological factors include R&D activity, automation, technology incentives, and rate of technological change. These could affect costs and quality and lead to innovation. A company would have to scan the landscape and the near-term horizon on upcoming technologies to be better prepared for any upcoming disruptions or opportunities they can leverage.
The PEST analysis is more detailed and can be classified under opportunities and threats in a SWOT analysis.


This tool can be added to your active workbook by clicking on Change and then selecting PEST Analysis. Click on Analysis Setup to open the menu options for this tool.


A sample screenshot of the setup menu is shown below.
Input Dialog
Analysis Type: Specify the tool format for this analysis. This selection is not enabled since there is only one format available.
Num Rows: Specify the number of rows on the tool. Currently, this option is fixed and not changeable.
View Example: Click on this button to add an example worksheet. You can use the example to understand how others have filled out the tool or use the example as a starting point and modify it to meet your needs better.
Help Button: Click on this button to open the help file for this topic.
Cancel Button: Click on this button to cancel all changes to the settings and exit this dialog box.
Create Button: Click on this button to save all changes and update the worksheet layout.
OK Button: Click on this button to save all changes and compute the outputs for this analysis.
The worksheet consists of four quadrants, one for each political, economic, social, and technological impact. You can review these with your cross-functional team and document all the factors on this worksheet. Opportunities are items that you can leverage to generate a positive impact on your business, and threats are items that may hurt your business. You can use a color code and highlight all the opportunities in green and threats in red.


You will see the following dialog box if you click the Checklist button. Checklist The checklist contains a few pointers on things you must pay particular attention to while performing this analysis. The checklist has been derived from experience working on past projects. Not all the checklist items need to apply to you. However, you should carefully review the checklist and apply any recommendations that make sense for your project. Make sure to read each checklist item and mark it as completed after you have read and taken actions as appropriate for your project.
Item: The items on the checklist are listed on the left
Status: The status of whether the checklist has been answered is listed on the right. If all the checked items are okay, the status image in the header will show a green checkmark. If any checks fail, then the status image in the header will show a red cross mark.
Ideally, all items on the checklist should be marked as reviewed/completed.


If you click the Verify button, the software will perform some checks on the data you entered. A sample screenshot of the dialog box is shown in the figure below. Verify The software checks if you have correctly specified the input options and entered the required data on the worksheet. The results of the analysis checks are listed on the right. If the checks are passed, they are shown as green checkmarks. If the verification checks fail, they are shown as a red cross. If the verification checks result in a warning, they are shown in the orange exclamation mark. Finally, any checks that are required to be performed by the user are shown as blue info icons.
Item: The left-hand side shows the major tabs and the items checked within each section
Status: The right-hand side shows the status of the checks.
Overall Status: The overall status of all the checks for the given analysis is shown here. The overall status check shows a green thumps-up sign if everything is okay and a red thumps-down sign if any checks have not passed. Note that you cannot proceed with generating analysis results for some analyses if the overall status is not okay.


Once you have answered all the data on the worksheet, click on Compute Outputs to update the conclusions area. A sample screenshot of the PEST analysis outputs is shown below. Outputs There are no specific graphical outputs to interpret for this analysis. If all the template elements have been filled out, you will get the following message when you click on the Compute Outputs button. PEST Outputs You can review the statements of the impact in each of the quadrants and determine what actions you need to take as a business to leverage opportunities and address the threats.


Here are a few pointers regarding this analysis:
  • You cannot directly modify the checklist since it is built into the program. You must contact the helpdesk if you need any changes in this checklist, and they can update this list for you.


The following examples are in the Examples folder.
  1. Perform a PEST analysis for the new product your company will launch (PEST 1.xlsx).

© Rapid Sigma Solutions LLP. All rights reserved.