Business Strategy in a Changing Environment

As time passes new economic, environmental and social business trends emerge. Most states are fortunate to have achieved huge success since their inception in creating start-ups and productive business climates over the years. This is where business succession has come into play and important to pass productive business skills to ones offspring and to other stakeholders so that neighborhoods survive well into the future. Serial entrepreneurs across the country often go into neighborhoods creating new business ideas that later once profitable sell at a margin while later moving on to other projects or start-ups. However, not every geographic location has a lot of access to venture or social capital; although many local business support type of organizations are today helping cultivate better business climates. In order to independently remain viable, successful and productive it is important for a business to pay attention to its ever changing exterior/interior environment. Here is where a yearly or every six month in house PEST analysis comes in handy. A PEST analysis helps you understand the Political; Economic, Social, and Technological changes emerging that could shape or affect your business. The big picture helps one spot opportunity’s and ways to prepare in advance from the warnings of possible threats. The analysis helps a business cope with the changes in order to survive profitably and work in new business strategies. Click here for a printable interactive template, PEST Analysis Sheet.

The PEST business tool was created by a Harvard Professor Francis Aguilar as a scanning tool he first called ETPS in his 1967 book “Scanning the Business Environment” which in reality is what the tool does very effectively but the acronym PEST was adopted instead for each of the areas being analyzed. (Mind Tools.com, 2013). The tool scans for legislation, society, economic and or the environmental changes whether natural or man -made in order to make best adaptations or ensure continuation of business success. A PEST analysis helps analyze more commonly a market while a SWOT analysis looks more at the effects to a business unit, proposition or an idea. Operations management and financial services consultant Bryan Van Eaton, MBA, of North Denver and current visitor at a Colorado Springs Military Veterans job network; suggested that a personal SWOT analysis is a great tool to also analyze oneself. What does a job seeker have to offer in way of opportunities to a business and in what areas may a person need to improve? For a SWOT analysis tool click here, SWOT.
As an example, legislation is being passed for immigration reform. Many paid attention to adverse effects it could have; however it seems like it will pass congress regardless. What opportunities could be found? Well, if you are a dress shop or a home improvement company chances are that your business sales could go up. On the other hand more security measures may have to be employed by a business during the change transition adjustments until it levels off. As another example, it is observed that weather is becoming more erratic. What could a business owner foresee coming into the future in regards to his location, business model, personal affairs etc. with the erratic changes. Does local city government need to study this in order to prepare for unknown contingencies down the road and or protect local shoppers, buyers and sellers in the future from the impending changes, its possible causes and any possible weather vested interests as a contributing factor? Could a working solution or contingency plan be attained?
A PEST analysis indeed does help a business break free of unconscious assumptions at a current market, new country or planned expansion into a new region since it helps keep an objective view of its operating environment.

Areas normally considered or add your own:
Political
• ecological/environmental current legislation
future legislation
• international legislation
regulatory bodies and processes
• government policies
• government term and change
trading policies
• funding, grants and initiatives
• home market pressure- groups
• international pressure- groups
• wars and conflicts

Economical
a- home economy
b- economy trends
c- overseas economies
d- general taxation
e- taxation specific to product/services
f- seasonality issues
g- market/trade cycles
h- specific industry factors
i- market routes trends
j- distribution trends
k- customer/end-user drivers
l- interest/ exchange rates
m- international trade and monetary issues

Social
a- lifestyle trends
b- demographics
c- consumer attitudes and opinions
d- media views
e- law changes affecting social factors
f- brand, company, technology image
g- consumer buying patterns
h- fashion and role models
i- major events and influences
j- buying access and trends
k- ethnic/religious factors
l- advertising and publicity
m- ethical issues
Technological
a- competing technology development
b- research funding
c- associated/dependent technologies
d- replacement technology/solutions
e- maturity of technology
f- manufacturing maturity and capacity
g- information and communications
h- consumer buying mechanisms/technology
i- technology legislation
j- innovation potential
k- technology access, licensing, patents
l- intellectual property issues
m – Global communications