Pest Analysis Essay
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The initials PEST analysis stands for political, economical, social and technological analysis. It is an analysis that focuses in describing environmental factors that affects an organization. One of the checklist that can be employed by an organization to check this issues is the PEST analysis. PEST analysis is an important tool, which is necessary for the strategic management of a business. In this paper we look into the structure of a good PEST. Writing of a PEST analysis is a necessary skill and a successful business organization should have it. The paper looks into the importance of this tool to an organization and how through the use of this tool a business organization can boost its performance.
In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its cost. The changes occurring in the modern society affects the functioning of an organization. This document focuses on environmental factors such as; environmental, political, social and technological, which affects the organization. PEST analysis check on how this factors interplay to affect the business or the activities of an organization.
PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. PEST headings forms a framework that can be used to review a situation and can therefore be used by companies in a strategic planning.
Writing of a good PEST analysis is a necessity for a business or an organization. In order to write a good document then it is important to put the four factors mentioned above into consideration. The PEST analysis should also allow for further discussion in any decision making to mean that it should be flexible. The PEST should address a market related subject like
- looking for market for a product, company, or brand
- strategic acquisition of a new market
- Potential companies or organizations to merge with
- A new and rewarding investment opportunity
When writing the PEST it is important that the subject for the analysis is described clearly in order to ensure that the people interpreting it and also those contributing to it do not have a difficult task. It is also necessary to consider each of the PEST factors, an overall interplay of these factors determine the immediate business environment, which will in turn affect the organization. Examples of topics to be include:
Political; the factors to be put into consideration under politics are; elections, wars, government policies, price control, structure of the government, and industrial regulations. The economic factors put into consideration are; economic growth trends within a country, taxation, the government’s budget, inflation factors, import/export ratio, unemployment levels and population’s living standard. The social factors that will be considered include; the demographic factors such as age, gender, family sizes, race population shifts, living standards, heal, migrations, leisure activities, occupation and fashion. On the other hand when considering technology then the things to be looked on are; new discoveries, energy regarding their sources, availability, cost, obsolescence rate, internet connectivity, and waste recycling/removal.
PEST analysis focuses on the external environment of a business and therefore it is a useful tool in understanding the wider perspective of this environment. The understanding of one’s business environment is necessary in strategic planning. With a good PEST analysis then a company can take advantage of upcoming investment opportunity.