Carrying out a PEST analysis.(Checklist 196)(political, economical, social technological)

[check] This checklist is designed to help those responsible for carrying out a PEST analysis for an organisation. It also provides guidance for students required to produce a PEST analysis as part of a marketing or strategic management assignment.

Definition

PEST analysis is a technique used to identify, assess and evaluate external factors affecting the performance of an organisation. A PEST analysis is undertaken to help an organisation gain an understanding of the wider business environment and may be carried out as part of an ongoing process of environmental analysis or scanning. The aim is to provide information to assist those responsible for strategy development and decision making. PEST analysis may be used in the context of overall organisational strategy or more specifically to evaluate the feasibility of a new product or service, or expansion into a new market.

Advantages of PEST analysis

PEST analysis:

* provides an understanding of the wider business environment

* encourages the development of strategic thinking

* may raise awareness of threats to an organisation's ongoing profitability

* can help an organisation to anticipate future difficulties and take action to avoid or minimise their effect

* can help an organisation to spot business opportunities and exploit them successfully.

Disadvantages of PEST analysis

* The rapid pace of change in society makes it increasingly difficult to anticipate developments that may affect an organisation in the future.

* Collecting large amounts of information may make it difficult to see the wood for the trees and lead to "paralysis by analysis."

* The analysis may…