Pest Analysis

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Date Submitted: 05/06/2011 11:55 PM

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PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT analysis, and Porter's Five Forces model, be used to review a strategy or position, direction of a company, a marketing proposition, or idea.Five-Forces Analysis provides a simple perspective for assessing and analysing the competitive strength and position of a corporation or business organization.

The five forces are:

1. Existing competitive rivalry between suppliers

2. Threat of new market entrants

3. Bargaining power of buyers

4. Power of suppliers

5. Threat of substitute products (including technology change)

This can be used to good analytical effect alongside other models such as the SWOT and PEST analysis tools. It provides suggested points under each main heading, by which you can develop a broad and sophisticated analysis of competitive position, as might be used when creating strategy, plans, or making investment decisions about a business or organization.

Michael Porter's key books:

Competitive Strategy: Techniques for Analyzing Industries and Competitors, 1980

Competitive Advantage: Creating and Sustaining Superior Performance, 1985

Competition in Global Industries, 1986

The Competitive Advantage of Nations, 1990

Scenario analysis is a process of analyzing possible future events by considering alternative possible outcomes (scenarios). Thus, the scenario analysis, which is a main method of projections, does not try to show one exact picture of the future. Instead, it presents consciously several alternative future developments. Consequently, a scope of possible future outcomes is...