Those who have undertaken a management training course will have been educated with a variety of tools and techniques they can use to improve the flexibility of their organisation. One such analytical tool is referred to as The P.E.S.T analysis.
The acronym stands for Political, Economic, Social and Technological. It is used to describe a framework of external macro-environmental challenges that any organisation may face. It is used when undertaking strategic analysis or market research, and gives management a framework for understanding macro-environmental factors that an organisation may need to take into consideration.
Political
Political issues that need to be taken into account may include a wide variety of factors. Some of these may include; employment law, tax policy, political stability, trade regulations and wage legislation.
Economic
Key factors may include exchange rates, inflation rates, interest rates, economic growth and general economic systems in place with may affect your company.
Social
Some of the things to consider here are cultural shifts and challenges, relevant population growth and development, health issues, age issues, demographics, leisure pursuits and education.
Technological
Consider key technological advancements and their impact, research and development issues, technological incentives and automation.
These issues represent just a few examples of macro-environmental factors that may affect your business. They tend to be issues out of your firm’s control, but knowledge of them and their implication may better equip the firm to face future challenges.