PEST Analysis

PEST Analysis

What is a PEST analysis?

A PEST analysis is a strategic business tool used by organizations to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future. The framework examines opportunities and threats due to Political, Economic, Social, and Technological forces. Outputs from the analysis inform strategic planning processes and contribute to market research.

The output from a PEST analysis is useful for informing other business management tools such as SWOT analysis, SOAR analysis, risk analysis, or a Business Model Canvas.

There are many variations of this framework, which look at different external factors, depending on which industry or market the organization operates in. Examples include PESTLE, STEEPLE, STEER, and STEEP.

Why do a PEST analysis?

  • Helps to evaluate how your strategy fits into the broader environment and encourages strategic thinking
  • Provides an overview of all the crucial external influences on the organization
  • Supports more decisive and knowledgeable decision making
  • Assists planning, marketing, organizational change initiatives, business and product development, project management, and research papers

Who should use a PEST analysis?

A PEST analysis is useful for any organization that needs to gauge current and future markets. The significance of each area in PEST Analysis will vary for different industry sectors. For example, there is likely to be a different emphasis on the technology element for IT organizations compared with those involved in health, tourism, mining, defense, and banking.

Facilitation tips
  • Carefully select participants to provide expert knowledge but also a fresh perspective.
  • Use technology to involve critical people in different locations rather than miss their contribution.
  • Minimize Groupthink by brainstorming ideas individually then combining issues to get the overall picture.
  • Be specific rather than broad when defining ideas.
  • Use quantitative data where possible to focus on the crux of issue.
  • Provide adequate time in the session to rank and prioritize ideas.
  • Communicate outcomes to stakeholders and regularly update progress on actions.

PEST analysis template

Political

Political or politically motivated factors that could impact the organization.

Examples include:

Government policy, political stability or instability, bureaucracy, corruption, competition regulation, foreign trade policy, tax policy, trade restrictions, labor/environmental/copyright/consumer protection laws, funding grants & initiatives, etc.

Questions to ask:

  • What government policies or political groups could be beneficial or detrimental to our success?
  • Is the political environment stable or likely to change?

Economic

Overall economic forces that could impact on your success.

Examples include:

Economic trends, growth rates, industry growth, seasonal factors, international exchange rates, International trade, labor costs, consumer disposable income, unemployment rates, taxation, inflation, interest rates, availability of credit, monetary policies, raw material costs, etc.

Questions to ask:

  • What economic factors will affect us moving forward?
    How does the performance of the economy affect us at the moment?
  • How are our pricing, revenues, and costs impacted by each economic factor?

Social

Social attitudes, behaviors, and trends that impact on your organization and target market.

Examples include:

Attitudes and shared beliefs about a range of factors including money, customer service, imports, religion, cultural taboos, health, work, leisure, the environment; population growth and demographics, immigration/emigration, family size/structure, lifestyle trends, etc.

Questions to ask

  • How do our customer’s beliefs and values influence their buying habits?
  • How do cultural trends and human behavior play a role in our business?

Technological

Technology that can affect the way you make, distribute, and market your products and services.

Examples include:

Technology and communications infrastructure, legislation around technology, consumer access to technology, competitor technology and development, emerging technologies, automation, research and innovation, intellectual property regulation, technology incentives, etc.

Questions to ask:

  • What technological advancements and innovations are available or on the horizon?
  • How will this technology impact on our operations?

How to do a PEST analysis

Analyze and consider both the current status of factors in the PEST template and how potential changes might affect the organization in the future.

Tip

To get the most from the PEST technique, gather input from a range participants with different perspectives. When you’re working with a large or distributed team, getting everyone together at the same time can be difficult, inconvenient, and costly. Using different technologies like video conferencing, online forms, and collaborative brainstorming software such as GroupMap can help overcome these challenges.

Brainstorm

Brainstorm ideas for each area of the PEST analysis template

Group

Review responses, and collate ideas.

Rate

Rate the ideas according to likely impact on the organization.

Share

Share the outcomes of the session to relevant stakeholders.

Brainstorm ideas related to the four PEST factors – Political, Economic, Social, and Technological. You can do the initial brainstorming as one large group or break out into smaller units and then merge the contributions to get an overview.

Tip

Online collaboration tools like GroupMap significantly reduce the amount of resources required to combine independent lists. They also make organizing and prioritizing the ideas faster and more straightforward, thus providing savings in time and effort over traditional brainstorming tools such as a whiteboard or post-it notes.

Once you have everybody’s input, group similar ideas and remove any duplication.

Get participants to rate each of the ideas based on the level of impact they think it will have on the organization.

Discuss any significant differences in the ratings. Get participants to explain their reasoning and ask the group rate those ideas again if they’ve changed their mind. When everyone’s thinking on the various factors is aligned, they will recognize and understand the challenges faced by others better.

The completed PEST analysis template provides a comprehensive overview of the opportunities and threats the organization faces now and in the future. Share the outcomes with relevant stakeholders and use the report to monitor progress and as an input for future reviews.

Repeat the PEST analysis at regular intervals to stay on top of changes in your external environment and keep your strategies and plans up to date.

Tip

GroupMap automatically generates visually appealing reports and action plans in several formats for distribution, saving time and effort after the analysis.

Cross Device Compatibility

Save effort, time and money with GroupMap

Whether you have your best minds together in the same room, or distributed around the world, GroupMap’s unique technology allows groups of up to 2000 to submit ideas independently at separate times, from different places, in different timezones. Prevent dominant personalities swaying the group, drowning out the opinions of others – GroupMap allows everyone to brainstorm independently then effortlessly combines that information to reveal the full spectrum of ideas. GroupMap templates keep the objective front and center throughout the session, keeping everyone on task. This ensures the activity identifies actionable issues rather than becoming just a discussion on ideas. GroupMap gives you all the group decision making tools you need to prioritize, decide and take action.

Create your first map and invite people in to start sharing their thoughts right NOW. Experience the power of GroupMap with our 14-day, no risk, FREE trial. You don’t even need to provide your credit card details to access to all of our features, including the entire suite of templates, for a full 14 days.

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BCG Matrix

bcg matrix

A BCG Matrix helps to better understand which product lines are bringing in profit, and which are weighing you down. The BGC matrix is the perfect tool for any product analysis.

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Ansoff Matrix

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The Ansoff Matrix is a great tool for devising strategies for future growth of your product by considering the market and product direction.

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SOAR analysis

SOAR analysis

What is SOAR analysis?

SOAR analysis is a strategic planning technique which helps organizations focus on their current strengths and opportunities, and create a vision of future aspirations and the result they will bring.

In contrast to SWOT analysis, the SOAR model uses appreciative inquiry to focus the business on what is known to work, rather than internal weaknesses or perceived threats that might not eventuate.

The output from a SOAR analysis is a set of actions that leverage strengths and opportunities to strive for shared aspirations with measurable results. It provides a basis for further in-depth analysis using other business tools.

Why do a SOAR analysis?

SOAR analysis is a powerful tool to bring stakeholders together to recognize the potential of the organization and create a shared vision of the future. Building on strengths requires less effort and resources than trying to correct weaknesses. The technique is more action oriented than a SWOT analysis and is focussed on outcomes. Use the SOAR model to:

  • To explore new initiatives
  • To develop a strategic plan and during annual strategy reviews
  • To focus and redirect efforts and resources
  • As part of a leadership development program
  • To plan an individual’s career or develop their performance plan

Who can use a SOAR analysis?

A SOAR analysis is a good option for new, less developed organizations. It works for everyone, no matter what position or level they hold and can include both employees and external stakeholders. It applies to:

  • All industries
  • All levels of an organization
  • Existing and new businesses
  • Companies striving for breakthroughs rather than gradual improvement
  • Individuals as part of their development plans
Related templates
Tips for facilitating an effective SOAR analysis
  • Carefully select participants to provide expert knowledge but also a fresh perspective.
  • Use technology to involve critical people in different locations rather than miss their contribution.
  • Minimize Groupthink by brainstorming ideas individually then combining issues to get the overall picture.
  • Be specific rather than broad when defining ideas.
  • Use quantitative data where possible to focus on the crux of issue.
  • Provide adequate time in the session to rank and prioritize ideas.
  • Communicate outcomes to stakeholders and regularly update progress on actions.

SOAR analysis template

A SOAR analysis template is structured as a simple 2 x 2 matrix, resulting in four quadrants highlighting Strengths, Opportunities, Aspirations, and Results.

Strengths

What the organization does well, along with its key assets, resources, capabilities, and accomplishments.

Example questions:

  • What do we excel at?
  • What are our greatest accomplishments?
  • What are we most proud of?
  • What makes us unique?
  • What do we provide that is world class?
  • What strengths are most valuable in our marketplace?
  • What do we do or have that’s better than anyone else?

 

Opportunities

Circumstances that your team could leverage for success, eg. to improve profitability, market share, or competitive edge.

Example questions:

  • What partnerships would lead to greater success?
  • What changes and trends in the market align with our strengths?
  • What threats do we see that we could reframe as opportunities?
  • What needs and wants are we currently not fulfilling for our internal and external stakeholders?
  • Are there gaps in the market that we could fill?

 

Aspirations

An expression of what you want to be and achieve in the future. A vision to build on current strengths, provide inspiration, and challenge the current situation.

Example questions:

  • What do we want to achieve in the future?
  • What should our future business look like?
  • How can we make a difference?
  • What are we passionate about?
  • What strategies and actions support our perfect future self?

 

Results

Tangible outcomes and measures that demonstrate you’ve achieved your goals and aspirations.

Example questions:

  • What measures will tell us we are on track to achieve success?
  • How do we translate our vision of success into tangible outcomes?
  • How do we know when we’ve achieved our goals?

 

How to do SOAR analysis effectively

To get the best possible outcomes from your SOAR analysis, choose participants with a broad range of perspectives. The group should consist of people from across different departments within your organization and could even include other stakeholders such as clients, suppliers, and partners.

If it’s difficult to get all participants in one place at the same time, screen sharing software and video conferencing allow facilitators to use traditional brainstorming tools like poster paper, whiteboards, and sticky notes. However, making sure everyone’s ideas are incorporated and transcribing, collating and prioritizing can be challenging. Online collaboration software such as GroupMap solves many of these problems and provides an efficient way to include, and consolidate all relevant information.

The time required to conduct an effective SOAR analysis will vary. However, it’s possible to set the scene, brainstorm, and prioritize within 45 minutes. Development of an initial action plan may take a further 30-60 minutes

Objectives

Define a clear, one sentence objective for the SOAR analysis.

Brainstorm

Gather input and ideas.

Collate

Clarify content, group similar ideas, and delete duplicates.

Prioritize

Vote and prioritize issues according to impact on the organization.

Action Planning

Create an action plan assigning responsibility for each issue to a group or individual.

Share

Share outcomes, including the action plan with relevant stakeholders.

Begin by stating the purpose of the SOAR exercise and ensure everyone is clear on the scope. Clarify:

  • What level of the organization the process will focus on – strategic, tactical, project, product/service, or personal level) and
  • Over what timeframe – i.e., the next month, year, or a multi-year period

Exploring the current vision of the organization, present any relevant data, and define the challenge for the session. The results from previous analysis and plans can be introduced at this point. For example, PEST/PESTEL, Stakeholder analysis, Business Model Canvas, SWOT analysis, BCG matrix, Porter’s Five-Forces.

Example SOAR Objectives:

  • Define strategic priorities for the next five years
  • Create a product development roadmap for Asia over the next two years
  • Create a professional development plan for the next 12 months

Ensure the group has a shared understanding of what the four quadrants mean and the questions that need answering.

Use break out groups to address each section of the SOAR Matrix. The size of the groups will depend on the objective of the session, whether everyone is in the same location, and their role or relationship with the organization. You might even choose to gather individual input. This step is an excellent opportunity to involve various stakeholders.

Don’t completely ignore threats and weaknesses even though they aren’t defined in the SOAR matrix. Instead, reframe them as a positive statement as a strength, opportunity, or aspiration.

Now you have all the ideas; it’s time to organize them. Cull any duplicates, merge similar themes, and discard any which aren’t within scope.

This step can be quite time-consuming, especially if the brainstorming step was done as individuals or in many smaller groups. An online collaboration tool like GroupMap, which automatically collates information and allows instant editing and reorganization of the information will significantly reduce the time required for this step and produce better outcomes.

Prioritize the information identified from the SOAR analysis by asking participants to vote on the most important issues for each quadrant. These are the factors you should address in your SOAR action plan.

Assign each person with one or more votes which they distribute across the issues they feel are most important. With multiple votes, they could use one per item or more than one if they feel something is critical.

The top 3-5 issues in each quadrant form the basis of the action plan. Ideally, strengths and opportunities will combine to achieve aspirations, and give results.

Decide on one or more actions for each priority. Assign responsibility to a group or individual and agree on time frames for completion.

Generate a report incorporating the findings of the SOAR analysis and action plan to distribute to relevant stakeholders. This report provides a means for monitoring progress and issuing regular updates. It’s important that those who gave up their time and effort to contribute to the analysis see tangible outcomes and improvement over time or they will be unwilling to participate in similar processes in the future.

The report also allows provides input for further analysis using other business tools and a starting point for future reviews.

GroupMap automatically generates visually appealing reports in several formats for distribution, saving time and effort after the workshop.

Cross Device Compatibility

Save effort, time and money with GroupMap

Whether you have your best minds together in the same room, or distributed around the world, GroupMap’s unique technology allows groups of up to 2000 to submit ideas independently at separate times, from different places, in different timezones. Prevent dominant personalities swaying the group, drowning out the opinions of others – GroupMap allows everyone to brainstorm independently then effortlessly combines that information to reveal the full spectrum of ideas. GroupMap templates keep the objective front and center throughout the session, keeping everyone on task. This ensures the activity identifies actionable issues rather than becoming just a discussion on ideas. GroupMap gives you all the group decision making tools you need to prioritize, decide and take action.

Create your first map and invite people in to start sharing their thoughts right NOW. Experience the power of GroupMap with our 14-day, no risk, FREE trial. You don’t even need to provide your credit card details to access to all of our features, including the entire suite of templates, for a full 14 days.

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