Understanding your sector
Understanding your sector

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

3 Using a PEST analysis to identify external factors

In this section, you will learn how to use a PEST analysis to investigate and analyse the external context in which your organisation is located.

As you have discovered, PEST analysis is a common method of identifying the external factors most likely to affect a business or an organisation. When these have been identified, they can be assessed in order to establish their likely impact. There are three steps involved in this process:

  1. You will need to identify the factors that will have the most impact on your organisation. This will involve research using various sources of information depending on the exact nature of your organisation. Listen to Rebecca and Charlie from Gradconsult explain different sources of information you can use to research your sector including social media and conferences organised by sector associations.
Download this video clip.Video player: boc_uys_1_video_week2_interview_fielding_reeve.mp4
Copy this transcript to the clipboard
Print this transcript
Show transcript|Hide transcript
Interactive feature not available in single page view (see it in standard view).
  • There are some common sources you might want to check.
    • Company annual reports frequently include a section scanning the horizon for future possibilities.
    • Trade and professional magazines and websites will contain research and comment on the wider context within which their members operate.
    • Newspapers such as The Times, The Guardian and The Financial Times have large sections devoted to industrial and commercial news and comment. You can search these online alongside other authorities such as the BBC.
    • The British Library puts together industry guides providing industrial overviews and details of sources of information on markets, competition and latest development.
    • LinkedIn is not just a collection of individuals – it also has many industrial and professional groups inviting comments and sharing insights. Following individuals or organisations on social media, such as Twitter, can sometimes also provide helpful insights.
    • Many professionals and insiders write blogs to inform others, and to encourage discussion and collaboration.
    • Visiting trade shows and conferences will bring you into contact with professionals speaking about major issues relating to a particular trade or industry.
  1. You will need to analyse what these factors mean in terms of their impact or potential impact. This involves realistically assessing how likely, or otherwise, it is that these factors will affect your organisation or sector, and whether this effect is likely to be helpful or not.
  2. The final step is to prioritise these factors in terms of their relative importance to your organisation or sector so that you know which to consider or tackle first.

Take your learning further

Making the decision to study can be a big step, which is why you'll want a trusted University. The Open University has 50 years’ experience delivering flexible learning and 170,000 students are studying with us right now. Take a look at all Open University courses.

If you are new to University-level study, we offer two introductory routes to our qualifications. You could either choose to start with an Access module, or a module which allows you to count your previous learning towards an Open University qualification. Read our guide on Where to take your learning next for more information.

Not ready for formal University study? Then browse over 1000 free courses on OpenLearn and sign up to our newsletter to hear about new free courses as they are released.

Every year, thousands of students decide to study with The Open University. With over 120 qualifications, we’ve got the right course for you.

Request an Open University prospectus371