Posts Tagged ‘reporting’

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.

Benefits of SWOT Analysis as a management reporting tool

As we stated in our article on management reporting methods – ensuring information is promulgated throughout the organization in a clear and concise fashion is extremely important – the use of best practice templates and methods can help facilitate this.

Of all the various models SWOT Analysis, while better known as a strategic tool, is a popular method associated with management reporting, encouraging review of internal and external influences and can be used to evaluate a variety of business activity from projects through to departmental performance.

SWOT is a four box communication method used to evaluate 4 key factors

Strengths

Internal Activity or attributes that are helpful to achieve objectives

Weaknesses

Internal Activity or deliverables that can have a detrimental impact on the objective.

Opportunities

External Activity that could be helpful in meeting targets

Threats

External Influences or activity that could have a detrimental impact on the objective

SWOTS are especially useful as a reporting tool because it helps identify actions that can be taken to achieve a desired state and as such are often used in strategic planning sessions

Weaknesses of SWOT analysis

While SWOTS can be very useful (especially in strategic analysis) they can have their downsides.

SWOTS can be subjective and overly critical (people typically find it easier to come up with weaknesses and threats than strengths and opportunities). And perhaps key – SWOTS do not automatically drive activity and without proper care and attention can be seen as a list building activity. As such SWOT’s should not be used in isolation.

In summary the use of SWOT analysis is widespread it is a common tool that can help in communicating information within an organization – its simple to construct and to understand used in isolation it can be used to share information – combined with an action plan it can be used as a strategic management tool

Management Reporting – using common methods to get your message across.

One of the common tasks within management is regular reporting of performance and issues. Finding the appropriate tool to communicate this is important as sharing data in a clear and concise method ensures performance and progress is understood and can be promulgated easily throughout the organization.

The most common form of business information that is generated is financial – this can take a variety of forms from P&L, Balance Sheet, Cash flow etc – However its important to remember that businesses have other things to communicate other than financial data such as personnel, marketing, customer satisfaction etc

There are a number of common management planning and analysis tools used within business that can be used to share this type of information. These provide a framework for communicating information and are useful in doing this in a standard routine way.

Examples of Management reports and communication methods.

SWOT Analysis Diagram– Identifies Strengths, Weaknesses Opportunities and Threats

SOFT – Simular to the SWOT, – Strengths Opportunities, Failures and Threats

PERT – Task Analysis model used to review Projects

Six Forces Model – Market Opportunities Model