To create a strategic development plan , a business needs a whole range of tools. PEST analysis is one of them. It helps to study the market before launching a new product, assess prospects and analyze potential risks. What is PEST analysis, what does it give to a business and how to do it correctly, experts from “Tochno.” told in this material.
What is PEST Analysis
PEST analysis is a tool how to build phone number list that shows a business how external factors affect it.
Factors are divided into 4 groups:
Political — political;
Economics — economic;
Socio-culture — socio-cultural;
Technological — technological.
Each group examines aspects that influence the development and income of the company.
Politics
– government support;
– government control; industries
– taxes, etc. Economy
– inflation;
– GDP;
– currency fluctuations;
– solvency of the population;
– unemployment rate;
– refinancing rate, etc.
Social sphere
– demography;
– cultural foundations;
– standard of living;
– education of the population;
– consumption standards, etc. Technologies
– innovations;
– scientific discoveries;
– technological changes in the industry;
– the impact of technologies on demand, etc.
All of this applies to the global level. For an interior design studio, external events that affect business will look like this:
Politics
— Sanctions prevent famous brands from importing finishing materials, furniture and luxury items to Russia;
— Tightening environmental standards will lead to increased demand for design projects that take into account the new requirements;
— If urban development standards how to get maximum traffic from each article change, designers will have to redesign apartments and offices, and this will change their working conditions. Economy
– High inflation will lead to people investing in real estate and renovation;
– Lower interest rates on loans will make purchasing designer services more affordable for clients;
– Changes in the exchange rate will make imported materials and furniture more expensive, which will affect the cost of the studio’s services.
Social sphere
— The fashion for hand-made design will reduce the demand for designer services ;
— Famous foreign designers work in the studio, and part of the audience refuses to work with them for patriotic reasons;
— One of the bloggers did not like the studio’s work and he publicly criticized the company. Technologies
— Development of AI will reduce demand for designer services;
— Development of virtual reality will help demonstrate design projects to clients;
— Use of 3D printing will allow creating unique creative interior elements according to individual orders;
— Integration of interior design with th phone numbers smart home systems will become a popular service.
Why does a company need a PEST analysis?
The result of PEST analysis is a formulated understanding of the situation. The method considers the enterprise not in a vacuum, but in the context of external factors.
It has three global tasks:
→ Show opportunities: the analysis will reflect favorable conditions for growth, scaling, entering new markets.
→ Prevent threats: the method will show potential dangers, obstacles, risks that can undermine the company’s stability and will help to develop defense tactics in advance.
→ Build a strategy: the methodology determines competitive advantages and creates a system of solutions that will bring the enterprise to a leadership position.
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About the advantages and disadvantages of the technique
The method is suitable for many companies, but it cannot be called universal. Companies choose it for the following advantages:
Understanding the market. Information about the market situation is needed to develop a strategy.
Identifying risks and opportunities. The analysis shows which events threaten the stability of companies and which will help them grow.
A balanced approach to decisions. The methodology helps to make winning decisions based on an understanding of the market and its trends.
The analysis also has shortcomings that limit its scope of influence. Here is a list of them:
Subjectivity : Results may be inaccurate, especially if the analysis is performed by one person.
Labor-intensive . Collecting and processing data for PEST analysis is time-consuming and expensive. On average, it takes several months.
Complexity of interpretation . It is not always obvious which category a given factor belongs to. This can lead to incorrect conclusions.
Information becomes outdated . PEST analysis can become outdated due to sudden changes in the economy, politics or society, and sudden global changes can make analyses irrelevant in a day.
High cost . Reliable data requires a large sample of people, making the study expensive and not accessible to all companies.
Types of analysis
The abbreviation of the groups became the basis for the term PEST. In 1967, the author of the analysis, Professor Francis Aguilar, called it ETPS, but the combination was difficult to pronounce. Therefore, the method began to be called PEST or STEP analysis.
Over time, the system was modernized. This is how the PESTEL, PESTELI, STEEP and LONGPEST methods appeared.
PESTLE PESTLE STEEP LONGPEST
The list of key PEST points is supplemented by the study of environmental (Ecological) and legal (Legal) areas. The list of key PEST factors
is supplemented by environmental and legal studies, as well as a study of the industry in which the organizations operate (Industrial). The list of key PEST factors is supplemented by the study of Ethical factors. An extended version of PEST, in which the influence of factors is considered at different levels – at the level of region, country and world. LONG
