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Wednesday, January 27, 2010

Strategic Planning - PEST Analysis

“Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort.” ~ Paul J. Meyer
Strategic planning is essential to guiding a business and moving to the next level in the future. An analysis of the microenvironment of the business brings clarity into the direction to guide the ship to optimize shareholder return. The acronym PEST (Political, Economic, Social, and Technical) is part of the overall environmental scan.
  • Political Factors - regulations and legal issues
    • tax policy
    • employment laws
    • environmental regulations
    • trade restrictions and tariffs
    • political stability
  • Economic Factors - affect purchasing power of customers and company's cost of capital
    • economic growth
    • interest rates
    • exchange rates
    • inflation rates
  • Social Factors - demographic and cultural aspects
    • health consciousness
    • population growth rate
    • age distribution
  • Technological Factors - can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing
    • R&D activity
    • automation
    • rate of technological change
The PEST analysis can also be classified as opportunities and threats in a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the company.

“Strategic planning will help you fully uncover your available options, set priorities for them, and define the methods to achieve them.”  ~ Robert J. Mckain


Reading:
Strategic Business Planning: A Dynamic System for Improving Performance & Competitive Advantage
Simplified Strategic Planning: The No-Nonsense Guide for Busy People Who Want Results Fast