What type of analysis is used to examine external factors in a business environment?

The examination of external factors in a business environment is effectively achieved through PEST Analysis. This analytical tool specifically focuses on understanding the broader external influences, categorized into Political, Economic, Social, and Technological factors that can impact an organization's performance and strategic positioning.

PEST Analysis is particularly valuable for identifying opportunities and threats arising from external conditions, which helps businesses make informed strategic decisions. By conducting this analysis, organizations can gain insights into market trends, regulatory changes, economic shifts, societal movements, and technological advancements that may influence their operations and strategies.

In comparison, while SWOT Analysis encompasses both internal and external factors, it is more of a comprehensive evaluation tool rather than one that solely focuses on external elements. The External Factor Evaluation Matrix, while also centered on external factors, is more structured and quantitative in nature, typically used to assess the impact of the identified external factors on the organization's performance. The Internal Factor Evaluation Matrix, on the other hand, is focused solely on internal factors and does not address external influences at all. Therefore, PEST Analysis is the most appropriate tool for examining external factors in a business environment.