Week_4_PEST Analysis.docx

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Ryerson University
Information Technology Management
ITM 700
Lin Ying Dong

PEST Analysis Understanding "Big Picture" Forces of Change PEST Analysis is a simple but important and widely-used tool that helps you understand the big picture of the Political, Economic, Socio-Cultural and Technological environment you are operating in. PEST is used by business leaders worldwide to build their vision of the future. It is important for the following main reasons: Firstly, by making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it; Secondly, good use of PEST Analysis helps you avoid taking action that is doomed to failure for reasons beyond your control; and Thirdly, PEST is useful when you start operating in a new country or region. Use of PEST helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment. How to use the tool: PEST is a simple mnemonic standing for Political, Economic, Socio-Cultural and Technological. Download our free worksheet to record your analysis. {Worksheet is attached.} Using the tool is a three stage process: • Firstly, you brainstorm the relevant factors that apply to you; • Secondly, you identify the information that applies to these factors; and • Thirdly, you draw conclusions from this information. Tip: The important point is to move from the second step to the third step: it is sterile just to describe factors without thinking through what they mean. However, be careful not to assume that your analysis is perfect: use it as a starting point, and test your conclusions against the reality you experience. The following factors may help as a starting point for brainstorming (but make sure you include others that may be appropriate to your situation): Political: • Government type and stability • Freedom of press, rule of law and levels of bureaucracy and corruption • Regulation and de-regulation trends • Social and employment legislation • Tax policy, and trade and tariff controls • Environmental and consumer-protection legislation • Likely changes in the political environment Economic: • Stage of busines
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