In analyzing the macro-environment, it is important to identify the critical factors that might have affect on the business. А number methods of have been developed so far.PESTanalysis happens to be one of the key tools to determine those factors in а various way.
Kotler (1998) claims that “PEST analysis is а useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.” The utilization of PEST analysis could be considered effective for the corporate benefit and strategic developments of the company. Although everything has its own Pros and Cons,PESTanalysis as а tool is not unlikely to them.
It can be said that Pest Analysis are sometimes done on simple assumptions which may not even exist in real. The reason behind may be the facts we take into account while doing аPESTfor any company. It may not be considered on specific area or may be they less possibility to happen reality. It is also considered that PEST analysis doesn’t really emphasise on critical factors and it one of the major lacking of this method is it only covers external issues without concerning the internal environment of the company and position of competitors in the industry. Another disadvantage for PEST would be it is not done on а regular basis as the rules and regulations, currency rate, variables, foreign investment and economic figures etc .change quite often. Indeed to make it more realistic and practical it is important to gather information and obtain different perspectives based on individual point of view which is going to increase cost thus, results as а limitation for this vastly used tool.