Scan the Environment with a PEST Analysis

"A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces...The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans...

In conducting PEST analysis, it is required to consider each PEST factor as they all play a part in determining the overall business environment. Some examples of topics include the following:

Political: (includes legal and regulatory): elections, employment law, consumer protection, environmental regulations, industry-specific regulations, competitive regulations, inter-country relationships/attitudes, war, terrorism, political trends, governmental leadership, taxes, and government structures.

Economic: economic growth trends (various countries), taxation, government spending levels, disposable income, job growth/unemployment, exchange rates, tariffs, inflation, consumer confidence index, import/export ratios, and production levels.

Social: demographics (age, gender, race, family size, etc.), lifestyle changes, population shifts, education, trends, fads, diversity, immigration/emigration, health, living standards, housing trends, fashion, attitudes to work, leisure activities, occupations, and earning capacity.

Technological: inventions, new discoveries, research, energy uses/sources/fuels, communications, rates of obsolescence, health (pharmaceutical, equipment, etc.), manufacturing advances, information technology, internet, transportation, bio-tech, genetics, agri-tech, waste removal/recycling, and so on."

Read more in this article from coursework4you.co.uk, which is also a great example of an article that provides an excellent executive summary of its topic.

Additional information on this topic is available in this summary from marketingteacher.com and this article and free template from businessballs.com (another good example of an excellent executive summary).

Technorati Tags: business, management, entrepreneurship, startup, legal

Share

Send in the SWOT Team

This wikipedia entry defines a SWOT Analysis as a "strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture or in any other situation of an organization or individual requiring a decision in pursuit of an objective. It involves monitoring the marketing environment internal and external to the organization or individual..."

This article from netmba.com explains:

"[Internal] factors should be evaluated across the organization in areas such as:

Company culture
Company image
Organizational structure
Key staff
Access to natural resources
Position on the experience curve
Operational efficiency
Operational capacity
Brand awarenes
Market share
Financial resources
Exclusive contracts
Patents and trade secrets...

The article identifies changes in the external environment in the following area may present opportunities or threats:

"Customers
Competitors
Market trends
Suppliers
Partners
Social changes
New technology
Economic environment
Political and regulatory environment"

This article from quickmba.com adds:

"Examples of...strengths include:

patents
strong brand names
good reputation among customers
cost advantages from proprietary know-how
exclusive access to high grade natural resources
favorable access to distribution networks

The absence of certain strengths may be viewed as a weakness. For example, each of the following may be considered weaknesses:

lack of patent protection
a weak brand name
poor reputation among customers
high cost structure
lack of access to the best natural resources
lack of access to key distribution channels...

Some examples of...opportunities include:

an unfulfilled customer need
arrival of new technologies
loosening of regulations
removal of international trade barriers...

Some examples of...threats include:

shifts in consumer tastes away from the firm's products
emergence of substitute products
new regulations
increased trade barriers"

Technorati Tags: business, management, entrepreneurship, startup, legal

Share

Tutorial Guide to Financial Statements

Do you think a balance sheet is a parlor trick involving bed linens? Do your eyes glaze over when your accountant hands you the financial statements? Are you curious about what all those numbers mean?

Then, check out Baruch College's Guide to Financial Statements - Online Tutorial for a step by step, easy to follow, informative overview of the basics.

You need never fear an annual report again.

Share