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The best way to do pest analysis


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The Best way to do PEST Analysis

This slideshow provides a brief tutorial on a new diagrammatic method, developed at the world famous Henley Business School in the UK.

The new method overcomes some of the major weaknesses of traditional PEST /‘PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis. Traditional PESTLE tends to generate a random list of unrelated facts – not very useful for understanding your business, developing strategy or convincing other business leaders.

We show how you can use the PESTLEWeb method to tell a clear and compelling ‘story’ that leads from key issues to business threats and opportunities.

PESTLEWeb is supported by a new tool at The new web-based tool helps you create great graphics and enables the automatic generation of outline reports and tabulated data to support your paper or presentation.

Published in: Business

The best way to do pest analysis

  1. 1. The Best way to doPEST AnalysisA brief introduction to the PESTLEWeb methodDr Rob © Rob Collins 2010
  2. 2. Setting expectations• Don’t expect to be ‘done in 10 minutes’• It will take time to do an analysis that is: • High quality • Information rich • Rigorous and Systematic • Valuable to your business • (or gets a top grade for your business strategy paper)• Every step of the analysis increases.. • your understanding • your sensitivity to your business environment © Rob Collins 2010
  3. 3. Overview of the Method1. Initial generation2. Cause consequence links3. Business Impacts4. Research5. Importance6. Future Scenarios7. Communicate! © Rob Collins 2010
  4. 4. Step 1: Initial Generation• If you have already identified any PEST / PESTLE issues make a list of these• Use checklists to help you identify some issues • A checklist is included in this slide-deck• Start drawing! • Copy each item into a block in the diagram • Label the block with the correct type © Rob Collins 2010
  5. 5. Step 2: Cause/Consequence Links• For each PESTLEWeb block look for possible causes and consequences… • Try to identify industry relevant items • Add these to the diagram• Look for threads or a or stories that run through the diagram• Link the PESTLEWeb elements together to show the logic of your argument © Rob Collins 2010
  6. 6. Step 3: Business Impacts• As consequences for your business add these to the diagrams as “impact” boxes © Rob Collins 2010
  7. 7. Step 4: Research• Don’t expect to have all of the knowledge already• Use the emerging PESTLEWeb to guide your search• Form hypotheses and go search for evidence• Engage in conversations with people with knowledge in specific areas• Ask ‘tough questions’ © Rob Collins 2010
  8. 8. Step 4: Importance• Review each item and decide the relative: • Importance to your business • Risk it may pose • Opportunity it may offer • Likelihood of occurrence © Rob Collins 2010
  9. 9. Step 5: Future Scenarios• Consider the important issues and threads on your PESTLEWeb model• What are the possible future scenarios within these threads?• Consider scenarios that: • Would have most impact • Are most likely • Are reasonably differentiated• Give the threads titles so you can talk about them • E.g. “Reversal in trend towards globalisation” © Rob Collins 2010
  10. 10. Step 6: Communicate!• Use your PESTLEWeb model to communicate with others• Draw people into the ‘Strategic Conversation’• Search out diverse views• Challenge the analysis and scenarios• Challenge your projects against your PESTLEWeb view of the world © Rob Collins 2010
  11. 11. PESTLE Checklist: Political• Political stability • Wage legislation - • Regulatory bodies and• Risk of military invasion minimum wage and processes• Legal framework for overtime • Government policies contract enforcement • Mandatory employee • Government term and• Intellectual property benefits change protection • Industrial safety • Trading policies• Trade regulations & regulations • Funding, grants and tariffs • Product labeling initiatives• Favored trading partners requirements • Home market pressure• Anti-trust laws • Ecological/environmental groups• Pricing regulations legislation • International pressure• Taxation - tax rates and • Current legislation groups incentives • Future legislation • Wars and conflicts• Work week • International legislation © Rob Collins 2010
  12. 12. PESTLE Checklist: Economic• Type of economic system • Labor costs Economic • Taxation specific to in countries of operation growth rate product/services• Government intervention • Discretionary income • Seasonality issues in the free market • Unemployment rate • Market/trade cycles• Comparative advantages • Inflation rate • Specific industry factors of host country • Interest rates • Market routes trends• Exchange rates & • Home economy • Distribution trends stability of host country • Economy trends • Customer/end-user drivers currency • Overseas economies • Interest/ exchange rates• Efficiency of financial • General taxation • International trade and markets • Business cycle stage (e.g. • Monetary issues• Infrastructure quality Prosperity, recession,• Skill level of workforce recovery) © Rob Collins 2010
  13. 13. PESTLE Checklist: Social• Demographics • Lifestyle trends • Fashion and role models• Class structure • Demographics • Major events and• Education • Consumer attitudes and influences• Culture (gender roles, etc.) opinions • Buying access and trends• Entrepreneurial spirit • Media views • Ethnic/religious factors• Attitudes (health, • Law changes affecting • Advertising and publicity environmental social factors • Ethical issues consciousness, etc.) • Brand• Leisure interests • Consumer buying patterns © Rob Collins 2010
  14. 14. PESTLE Checklist: Technological• Recent technological • Research funding • Consumer buying developments • Associated and dependent • Mechanisms/technology• Technologys impact on technologies • Technology legislation product offering • Replacement • Innovation potential• Impact on cost structure technology/solutions • Technology access• Impact on value chain • Maturity of technology • Licensing, patents structure • Manufacturing maturity • Intellectual property issues• Rate of technological and capacity diffusion • Information and• Competing technology communications © Rob Collins 2010
  15. 15. What others are saying …  Your business needs ‘radar’ to scan your current environment for threats and opportunities Day, G.S. and Schoemaker, P.J.H “Peripheral Vision: Detecting the weak signals that make or break your company”  Your strategic success depends on a deep understanding of future scenarios Van Der Heijden, (1996) “Scenarios: The art of Strategic Conversation” © Rob Collins 2010
  16. 16. PESTLEWeb turns a list of TMunrelated facts into a – Convincing .. – Relevant … – Well-structured ..…argument © Rob Collins 2010
  17. 17. PESTLEWeb TMPicture your Business © Rob Collins 2010