Lets look at each of these macro-environmental factors in turn.
For example, opportunities can come from new technologies that help you reach new customers, from new funding streams that allow you to invest in better equipment, and from changed government policies that open up new markets.
Threats can include deregulation that exposes you to intensified competition; a shrinking market; or increases to interest rates, which can cause problems if your company is burdened by debt.
Find out what forces of change are affecting your business environment. PEST Analysis is useful for four main reasons: It helps you to spot business or personal opportunities, and it gives you advanced warning of significant threats.
It reveals the direction of change within your business environment. It helps you avoid starting projects that are likely to fail, for reasons beyond your control. It can help you break free of unconscious assumptions when you enter a new country, region, or market; because it helps you develop an objective view of this new environment.
PEST Analysis looks at "big picture" factors that might influence a decision, a market, or a potential new business.
SWOT Analysis explores these factors at a business, product-line or product level. These tools complement one another and are often used together. How to Use the Tool Follow these steps to analyze your business environment, and the opportunities and threats that it presents.
Use PEST to brainstorm the changes happening around you. Use the prompts below to guide your questioning, and tailor the questions to suit the specific needs of your business.
Brainstorm opportunities arising from each of these changes. Brainstorm threats or issues that could be caused by them. Our worksheet guides you through these steps. How could this change government or regional policy? Who are the most likely contenders for power?
What are their views on business policy, and on other policies that affect your organization? Depending on the country, how well developed are property rights and the rule of law, and how widespread are corruption and organized crime? How are these situations likely to change, and how is this likely to affect you?
Could any pending legislation or taxation changes affect your business, either positively or negatively? How will business regulation, along with any planned changes to it, affect your business? And is there a trend towards regulation or deregulation?
How does government approach corporate policy, corporate social responsibility, environmental issues, and customer protection legislation? What impact does this have, and is it likely to change?Originally known as PEST Analysis, this is a macro environmental framework used to understand the impact of the external factors on the organization and is used as strategic analytical technique.
PEST analysis (political, economic, socio-cultural and technological) describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. A PESTLE Analysis can be used to consider political, economic, social, technological, legal, and environmental issues that may affect your organization.
It is often used when launching a new product or service, exploring a new route to market, or selling into a new country or region. PESTLE analysis allows you to evaluate the larger picture of the environment a business operates in by looking at the political, economic, social, technological, legal, and environmental elements.
L'Oreal is one of the leading cosmetics and Beauty Company in the world. It is making many different varieties of products to meet up the needs of the.
A Tesla Model S at the Osaka Motor Show. A PESTEL/PESTLE analysis of Tesla Inc. (formerly Tesla Motors, Inc.) shows that the external factors in the company’s remote or macro-environment present opportunities for global expansion.