Strategy Assessment Methods: PEST

Strategy Assessment Methods: PEST 

By John Kyriazoglou

The following methods and techniques may be utilized for the analysis, assessment and evaluation of strategy of any type of organization. The evaluator may use only one method, or more than one, depending on his (or her) experience and situation.

These methods and techniques are: SWOT analysis, PEST Analysis (also known as PESTLE Analysis), Gap Analysis, Portfolio analysis, Value chain analysis, Delphi Method, Life cycle analysis, Screening strategic options, Financial analysis, Scenario planning, Critical success factor analysis, The five forces, Directional Policy Matrix, and Competitor Analysis.

A previous post described SWOT. This post describes PEST. Other future posts will deal with the rest of these methods and techniques.  

PEST Analysis (also known as PESTLE Analysis)

PEST analysis is concerned with the environmental influences on a business. The acronym PEST stands for the Political, Economic, Social and Technological issues that could affect the strategic development of a business. The acronym PESTLE stands for the Political, Economic, Social, Technological, Legal and Environmental issues that could affect the strategic development of a business.

 Political issues are factors and conditions that relate to how governments intervene in the economy. These include: Tax and customs regulations, laws (labour, environment, health, etc.), political stability, government spending, government organization and attitude environmental regulation and protection, government spending on research, etc.

 Economic issues are factors and conditions that relate to how the economy impacts a business. These include: economic growth, income distribution, foreign exchange rates, inflation rate, cost of capital, monetary policy, costs of exporting or importing goods and services, risk appetite of industry, energy cost, etc.

 Social issues are factors and conditions that relate to how the society impacts a business. These include: Health consciousness, population growth rate, age distribution, demographics, living and housing conditions, career attitudes, emphasis on safety, trends of fashion, etc.

 Technological issues are factors and conditions that relate to how the technology impacts a business. These include: Automation processes, production processes, IT systems and communication systems, communication infrastructure, research and development activity, rate of technological change, internet, etc.

Legal issues are factors and conditions that relate to how laws and regulations impact a business. These include: Data privacy law, consumer law, anti-trust law, employment law, health and safety laws and regulations, accounting standards and regulations, compliance laws, etc.

Environmental issues are factors and conditions that relate to how the environment impacts a business. These include: ecological and environmental aspects such as weather, climate, climate change, etc.

 

 

Strategy Assessment Methods: SWOT

Strategy Assessment Methods: SWOT 

 

By John Kyriazoglou

 

The following methods and techniques may be utilized for the analysis, assessment and evaluation of strategy of ant type of organization. The evaluator may use only one method, or more than one, depending on his (or her) experience and situation.

These methods and techniques are:

SWOT analysis,

PEST Analysis (also known as PESTLE Analysis),

Gap Analysis,

Portfolio analysis,

Value chain analysis,

Delphi Method,

Life cycle analysis,

Screening strategic options,

Financial analysis,

Scenario planning,

Critical success factor analysis,

The five forces,

Directional Policy Matrix, and

Competitor Analysis.

 

This post describes SWOT. Other future posts will deal with the rest of these methods and techniques.

 

SWOT analysis

 

The SWOT analysis (strengths, weaknesses, opportunities, threats) is one of the most popular. This involves looking at the strengths and weaknesses of your business' capabilities, and any opportunities and threats to your business.

 

Once you've identified all of these, you can assess how to capitalise on your strengths, minimise the effects of your weaknesses, make the most of any opportunities and reduce the impact of any threats.

 

It's important to remember that opportunities can also be threats - for example, new markets could be dominated by competitors, undermining your position. Equally, threats can also be opportunities - for example, a competitor growing quickly and opening a new market for your product or service could mean that your market expands too.

 

A SWOT analysis can provide a clear basis for examining your business performance and prospects. It can be used as part of a regular review process or in preparation for raising finance or bringing in consultants for a review.

 

Once you have collected information on your organisation's internal strengths and weaknesses, and external opportunities and threats, enter this data into a simple table.

 

Use the following questionnaire to help you to carry out a SWOT Analysis.

 

Strengths

 

1. What advantages does your organization have?

2. What do you do better than anyone else?

3. What unique or lowest-cost resources can you draw upon that others can't?

4. What do people in your market and industry see as your strengths?

5. What is the unique selling point of your company?

 

Weaknesses

 

1. What processes could you improve?

2. What should you avoid or minimize?

3. What are people in your market and industry likely to see as your weaknesses?

4. What factors, conditions or circumstances lose you sales?

 

Opportunities

 

1. What good opportunities can you foresee?

2. What interesting trends or inventions are you aware of?

3. What useful opportunities can come technology or systems or production processes or social patterns you can take advantage of?

 

Threats

 

1. What difficulties and obstacles do you face?

2. What are your competitors doing?

3. Are quality standards or specifications for your job, industry, products or services changing?

4. Is changing IT or other technology threatening your position?

5. Do you have bad debt or cash-flow or other financing problems?

6. Could any of your weaknesses seriously threaten your business?