PEST analysis is a major part of the opportunities and threats appraisal. It is the second half of the Strengths Weaknesses Opportunities and Threats (SWOT) analysis.
The SWOT analysis is the central stage of the strategic planning process.
It is wise to take a broad look at what is going on in the wider world, at the local, national, and international level. After this, one can make a detailed analysis of the specific industry or community sector of the organization.
This environmental scan should cover four areas of possible change -
Briefly P E S T, hence PEST analysis.
Begin the analysis with changes likely in laws related to the activities of the firm. These may include safety, products, employment, liability, and labeling.
Other possible changes could be in taxes, environment, tariffs, quotas, or trade sanctions.
Review changes in international relations, and crises like piracy, terrorism, wars, and revolutions. Look not just at formal statements of legislative change. Check out also what interest groups, activists, and lobbyists may be up to!
The next step is to review possible changes in the economy. This could include -
After studying politics and economics, turn to changes in society. Areas for review could include -
The next stage in the analysis is a look at technological change. Review -
The PEST becomes the PESTI analysis with the addition of a fifth area of change to look into - changes in your own industry.
This review could look at trends such as -
If you feel that the five main categories listed above do not include some major areas of concern to your particular organization, simply add a category. Perhaps you could list them as ‘other’; then we have PESTIO analysis.
It is your environmental scan!
You can find a free PEST analysis template at Businessballs, a free learning and development resource for people and organizations, run by Alan Chapman, in Leicester, England.
IBISWorld industry research reports are business tools that provide strategic insights and analysis on over hundreds of industries.
Also, check the link to Synergyst Reports in the right hand column, and check out the books listed below.
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