Management analysis PEST tools & techniques

There are a number of tools available for business managers when undertaking either
strategic planning or analyzing performance. Tools such as SWOT Analysis, SOFT reports and standard financial reports such as Profit & Loss reports all offer some standard best practice that are easy to deploy and don’t require specialist tools.

Another common tool which can be used as a reporting mechanism is the PEST report. PEST analysis stands for “Political, Economic, Social, and Technological analysis”. When completed the PEST analysis communicates a series of environmental factors which can also be used when strategic planning.

When carrying out any strategic planning its vital to review external factors. For example government policy in the form of tax and
environmental policy could each play a factor in the success of your business.

However, you can also use PEST reports outside of strategic planning as in the guise of a monthly reporting tool it provides a standardized mechanism of regularly reviewing external factors on your business or department.

Breaking down the PEST analysis tool

When constructing your PEST analysis there are various attributes to consider:

Political factors

Political factors can include a range of issues that government can impact. They notably include obvious spheres of influence such as tax and employment law but also include areas such as trade policies (especially international law) including trade restrictions and tariffs.

Governments can also promote trade in certain sectors (consider the recent promotion of environmentally sound products as opposed to those that may be thought of as contributing to global warming.)

Economic factors

There is a range of economic factors to consider in your pest report – these tend to articulate financial constraints or opportunities for the organization and range from Exchange rates, Tax, Economic growth, Interest rates.

Financial issues can impact a number of things from export and import opportunities through to how capital is invested.

Social factors

Social factors can have a big part to play on the market appetite for a product. They can also influence how an organization functions: for example the demographics of the population can influence a range of functions not the least recruitment policy.

Social factors are built up from a variety of elements such as ethnicity, age, social attitudes (from career planning through to thoughts on trends and social causes)

Social factors are important as they reflect the barriers organizations might face into selling and producing their products and these factors often require mitigation strategies.

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