(SHORT
NOTES FROM STRATEGY TOOLS:
Core
Strategy Tools at http://www.mindtools.com)
Changes in your business environment can
create great opportunities for your organization – and cause significant
threats. Threats can include:
o deregulation that exposes you to intensified
competition;
o a shrinking market; or
o increases to interest rates, which can cause
problems if your company is burdened by debt.
PEST Analysis is a simple and widely
used tool that helps you analyze the Political, Economic, Socio-Cultural,
and Technological changes in your business environment. Harvard professor Francis Aguilar is thought
to be the creator of PEST Analysis. PEST
Analysis is useful for:
o It helps to spot business or personal opportunities.
o It gives advanced warning of significant threats.
o It reveals the direction of change within business
environment.
o It helps shape what you're doing.
o It helps you work with change, rather than against
it.
o It helps you avoid starting projects that are likely
to fail, for reasons beyond your control.
o It can help break free of unconscious assumptions
when you enter a new country, region, or market
o It helps develop an objective view of this new
environment.
How to Use the Tool
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Brainstorm
Factors
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|
Political Factors to Consider
o the
country's next local, state, or national election
o change
in government or regional policy
o likely
contenders for power
§ views
on business policy
o property
rights and the rule of law
o corruption
and organized crime
§ likeliness
of change in situation
o pending
legislation or taxation changes
o business
regulation
o trend
towards regulation or deregulation
o corporate
policy, corporate social responsibility, environmental issues
o customer
protection legislation and its impact
o likely
timescale of proposed legislative changes
o any
other political factors that are likely to change
|
|
Economic Factors to Consider
o stability
of current economy
o growing,
stagnating, or declining economy
o stability
of key exchange rates
o changes
in customers' levels of disposable income
o unemployment
rate
o cost
of hiring or employing skilled workforce
o easy
access to credit
o globalization
affecting the economic environment
o any
other economic factors
|
|
Socio-Cultural Factors to Consider
o population's
growth rate and age profile
o likeliness
of shifts in attitude
o society's
levels of health, education, and social mobility
§ changes
and impact
o employment
patterns, job market trends, and attitudes toward work
§ differences
in different age groups
o social
attitudes and social taboos
o socio-cultural
changes
o religious
beliefs and lifestyle choices
o any
other socio-cultural factors
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|
Technological Factors to Consider
o new
technologies
o new
technologies on the horizon that could radically affect
o competitors
have access to new technologies
o focus
research of governments and educational institutions
o infrastructure
changes affected work patterns
o existing
technological hubs to work with
o any
other technological factors
|
|
Brainstorm
Opportunities
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Brainstorm
Threats
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Take
Action
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