View Larger Image Advantages and Disadvantages of PESTLE Analysis In this ever-changing, highly complex and competitive global business environment, the organizations and the managers are facing enormous challenges and paying much more attention on strategic planning and analysis. Strategic planning tools and analysis help organizations to identify key elements affecting the environment as well as performance and growth of the organization.
Related Links The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit.
A PEST analysis guides us to identify effective strategies Product launch with pest analysis setting priority, allocating resources, planning for time and development roadmap and formulating control mechanisms.
With this analysis, you can identify potential opportunities and threats associated with your strategy and figure out ways to take advantage of them and avoid them.
Political Factors These are all about how and to what degree a government intervenes in the economy. This can include - government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on.
It is clear from the list above that political factors often have an impact on organisations and how they do business. Organisations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly.
Economic Factors Economic factors have a significant impact on how an organisation does business and also how profitable they are. Factors include - economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on.
These factors can be further broken down into macro-economical and micro-economical factors. Macro-economic factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms for managing macro-economic factors.
Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C organisations in particular. Social Factors Also known as socio-cultural factors, social factors are the areas that involve the shared belief and attitudes of the population.
These factors include - population growth, age distribution, health consciousness, career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.
Technological Factors We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways: New ways of producing goods and services New ways of distributing goods and services New ways of communicating with target markets Analyzing these factors will help you and your team gain a comprehensive understanding of the external macro environmental factors that may positively or negatively affect your company's strategic planning process.
With access to such knowledge, you can quickly come up with strategies that would put the company on the fast track to achieving its goals. Benefits of PEST Analysis A company may have all the information it requires about the quality of its infrastructure, the extent of funds, and the employee talent available to it, but it may not be fully aware of the external environment in which it is to operate or launch a new project.
It can even predict future prospects of a project or product by studying the PEST factors. Provides an understanding of the wider business environment.
Encourages the development of strategic thinking. Straightforward and only costs time to do. May raise awareness of threats to a project. Can help an organisation to anticipate future difficulties and take action to avoid or minimise their effect. Can help an organisation to identify and exploit opportunities.
An Example - Impact of Technology Factor Let's take a moment to consider the impact that technology has had on our country's economy. Most people will agree that technology has made our lives much easier. The Internet, for example, has changed the way we bank, pay our bills, search for goods and services, book holidays, undertake study, and shop.
However, technology has caused serious damage to some businesses. To answer this question, a PEST analysis encourages management to carefully study what is happening in the environments that encapsulate their business. As business managers we must understand that, although these external forces are largely outside of our control, we still need to carefully consider them.
The underlying function of the analysis is not just to review what has already happened, but also predict what is likely to happen in the near future. This ensures we are aware of them and highly perceptive to their possible affects on our business. The external influences on business vary from country to country.
It is very important that those factors are considered. To conducting a PEST Analysis, we can come up a set of brainstorming questions with answers and actions of them related to each of the four factors: Political Factors The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses.
You must consider issues such as: How stable is the political environment?pest/ pestel/ pestle The main purpose of PEST analysis is to provide the manager or head of the enterprise or company with information regarding the surrounding situation in the world that can be crucial for making decisions.
Here’s how you can use PEST analysis for a successful product launch. 1. Get your bases covered with PEST analysis. PEST analysis examines four major factor that will affect your business launch. Here’s how you can use PEST analysis for a successful product launch.
1. Get your bases covered with PEST analysis. PEST analysis examines four major factor that will affect your business launch. PESTLE analysis enables organizations to identify the most influential factors which can significantly affect the product launch in a particular market.
PESTLE analysis by increasing strategic thinking foster a deeper understanding of strategic planning. What Is PEST Analysis? The PEST is an acronym for Political, Economic, Social and Technological. This analysis is used to evaluate those four factors that can affect the performance of your business analysis and determine how those factors will affect your business in the long run.
The PEST analysis is often used together with the SWOT Analysis and Porter’s Five Forces Analysis. PEST Analysis Variants. Traditionally, PEST analysis focuses on political, economic, sociological and technological factors, but increasing awareness of the importance of legal, environmental and cultural factors has led to the evolution of a growing number of variants.