Systemic PEST Analysis : Strategic Analysis

Management

Systemic PEST Analysis for Strategic Analysis

Basically, PEST is stand for Political, Economic, Social, and Technological factors that help a company in the product development, market research, strategic planning of marketing activities and making strategic business decisions. As a strategic management tool, PEST offers informational support to organizations so that they can take strategic decisions. In this research paper, significance, and roles of PEST would be discussed in order to conduct the strategic analysis. In the present time of competitive based business era, PEST is utilized for the strategic analysis. For case, a company can analyze its external business environment and conduct strategic analysis for the current and future. In the same way, it supports organizational strategic practices and activities successfully (Agyekum, Ansah, & Afornu, 2020). With the help of PEST analysis, a company can examine four types of external factors such as:

• Political Factors: Environmental guidelines & principles, taxation polices, security controls, trading agreements, administrative stability, rule of law, are the major examples of political factors. Moreover, under this, a range of political lobbying as well as government interventions activities are analyzed and examined.
• Economic Factors: These factors mainly include macroeconomic circumstances of the external environment. Interest rate, inflation, labor costs and labor supply, unemployment rate, GDP, exchange rate etc. are the key economic factors.
• Social Factors: This covers demographic, cultural and social factors of the external environment. Education level, language, gender roles, living standards, consumer taste and demographic trends are the key social factors (Basco, Rodríguez-Escudero, Cruz, & Barros-Contreras, 2021).
• Technological Factors: This considers technological changes, technology incentives, and technological infrastructures that have impact on the external business environment.

Along with this, it should also be noted down that, with the help of systematic PEST analysis, a company can analyze major external factors those are directly and indirectly affecting the business strategies, operations and growth of the company. In the same way, it helps a company in becoming more competitive in the market. Moreover, this systematic tool is also important because it allow an organization to maximize its ability to do respond the market changes successfully (Brege, & Kindström, 2020). So, it allows a company to stay ahead of competitors. Additionally, PEST is also help a company in developing more specific and reliable business strategies in an effective and proper manner. Systematic PEST Analysis is also permit a company to capitalize business opportunities. On the other hand, a company can detect possible challenges and issues successfully. For case, it is also allow a company to conduct effective planning about how to manage and deal with such issues properly. As a systematic tool, PEST is also allows a company to analyze and outline strengths and weaknesses in its policies, strategies and technology (Debnath, Bardhan, Reiner, & Miller, 2021).

PEST analysis is done by a company for the purpose of strategic analysis of internal policies and strategies. For instance, a company can analyze the major factor that may affect the success and growth of a company in the current and future. It is also allow a company to overcome and deal with a range of serious business issues and risks. For example, it allows a company to develop better long term business and marketing strategies effectively. PEST is also more helpful and beneficial for a company because it helps a company in understanding of overall market environment. For case, it can understand the level of risk factors of market and make strategic decisions and planning for the overall success and growth. Apart from this, it is also analyzed that, systematic PEST analysis is also allow today’s organizations to make strategic plan and develop best strategies accordingly. For case, it is also offer specific forecast tool that help in estimating the future effectively (Elavarasan, Afridhis, Vijayaraghavan, Subramaniam, & Nurunnabi, 2020)..

PEST analysis also allows a company to anticipate future and upcoming issues and take strategic actions in order to deal with such difficulties properly. Hence, it provides future directions to a company. On the other hand, a company can also get objectives view on the new as well as different markets. For case, a company can make and take strategic business decisions based on the facts rather than unconscious assumptions. PEST is more systematic tool and used for the strategic analysis. For example, most of organization use PEST to get the right direction about the business growths, brand positioning, risks and productivity. Moreover, as a strategic business planning tool, PEST allows a company to decide the rationality existing products/services and define a new product.

PEST is also used in the workforce planning analysis by the organizations. For case, it helps in identifying of disruptive changes to business models. This tool is mainly used for identifying of job roles, skills gaps, and job displacements. On the other hand, it is also provide the direction to a company about how to prioritize a range of specific business activities in order to attain marketing objectives within the designed time period. It is also more important tool to check the product development process. For example, systematic PEST has ability to monitor as well as analyze external activities. It is also informs a company to enter into a market or not in order to product launch (Elavarasan, Afridhis, Vijayaraghavan, Subramaniam, & Nurunnabi, 2020).

Today’s big companies such as MNCs are using PEST to understand the context of organizational change. By using this, a company can understand the business threats as well as opportunities about the labor changes including skill shortage. It is also provide suggestion to a company about how to conduct the market research to become more competitive in the market. For example, it suggests a company that it should understand an overview of the various external factors in order to take any decision. Moreover, it is also important for a company to understand the market from the different perspectives. Along with this, it is also analyzed that, by using this tool, a company can also understand the market decline or growth rate, future direction of the organization and business positioning (Debnath, Bardhan, Reiner, & Miller, 2021). .

Apart from this, it is also important to know that, PEST analysis is also utilized by companies in conjunction with various forms of strategic business planning such as SWOT. For case, a company can develop strategies, policies and norms based on strengths, weaknesses, opportunities, and threats. Hence, in order to make more informed business decisions, a company should use PEST analysis. Moreover, it is also used for the competitive analysis. For example, a company can identify its various types of competitors and develop various strategies based on the competitors. Overall, it can be concluded that, today’s business firms are using a range of strategic management tools such as: PEST in order to conduct the strategic analysis. This offers a range of tangible and intangible advantages to a company and helps in the attainment of common business goals and objectives.

References

Agyekum, E. B., Ansah, M. N. S., & Afornu, K. B. (2020). Nuclear energy for sustainable development: SWOT analysis on Ghana’s nuclear agenda. Energy Reports, 6, 107-115. DOI: https://doi.org/10.1016/j.egyr.2019.11.163

Basco, R., Rodríguez-Escudero, A. I., Cruz, N. M., & Barros-Contreras, I. (2021). The Combinations of Market and Non-Market Strategies That Facilitate Family Firm Survival. Entrepreneurship Research Journal, 11(3), 245-286. DOI: https://doi.org/10.1515/erj-2019-0258

Brege, H., & Kindström, D. (2020). Exploring proactive market strategies. Industrial Marketing Management, 84, 75-88. DOI: https://doi.org/10.1016/j.indmarman.2019.05.005

Debnath, R., Bardhan, R., Reiner, D. M., & Miller, J. R. (2021). Political, economic, social, technological, legal and environmental dimensions of electric vehicle adoption in the United States: A social-media interaction analysis. Renewable and Sustainable Energy Reviews, 152, 111707. DOI: https://doi.org/10.1016/j.rser.2021.111707

Elavarasan, R. M., Afridhis, S., Vijayaraghavan, R. R., Subramaniam, U., & Nurunnabi, M. (2020). SWOT analysis: A framework for comprehensive evaluation of drivers and barriers for renewable energy development in significant countries. Energy Reports, 6, 1838-1864.DOI: https://doi.org/10.1016/j.egyr.2020.07.007