One of the analyses that should be done for businesses to analyze the situation they are in is the general environment analysis. For this reason, in this article, “What is PEST Analysis and How is it Done?” We have compiled the answer to the question for you. General environment analysis is carried out by examining the changes that occur or may occur in the external environmental elements that the enterprises cannot intervene, and by determining how much of a threat or opportunity the factors included here are for the enterprise. The external environmental elements that the business cannot interfere with are generally expressed as political, economic, socio-cultural, and technological changes. The expansion of PEST analysis consists of the initials of all these elements. Not being able to be informed about the changes that may occur in these elements forces businesses to struggle with uncertainty.
Why is PEST Analysis Performed?
In today’s rapidly changing competitive conditions, it is of great importance for businesses to determine their strategy by revealing what opportunities or threats the business may face in the future as a result of the PEST analysis carried out in order to analyze the situation they are in and may encounter in the future. As the changes in the elements in the general environmental conditions, which we can be informed about as a result of the PEST analysis, are generally slow and insidious, businesses are often caught unprepared for these changes. In addition, the biggest threats to the survival of the businesses that are caught unprepared for these changes arise from these factors. While performing the PEST analysis, some deficiencies, mistakes, or the lack of PEST analysis in practice may cause the enterprises to determine the strategy with incomplete or incorrect information, the determined strategy to deviate the business from its goals, and even the termination of the activities of the enterprise.
How is PEST Analysis Performed?
Some elements should be considered in a correctly performed PEST analysis. First of all, the fact that target-oriented businesses focus on potential changes rather than current changes in political, economic, sociocultural, and technological environmental elements will further clarify the strategic roadmaps they set while moving toward their goals. Otherwise, businesses may face more time and more resource wastage with the daily decisions they take under uncertainty. This situation makes the decisions taken depend on luck rather than rationality.
Another issue needed for an accurate PEST analysis is to determine what the changes might be. Today, consultancy companies, industry umbrella organizations, international institutions, and organizations such as the EU, OPEC, and the United Nations publish detailed reports that both concern the sectors and examine these changes in general. In addition, these reports are constantly updated in light of unexpected changes such as COVID-19. In this direction, it will enable businesses to take more rational decisions strategically, not only concerning their sectors but also examining the reports of their customers, suppliers, in short, the sectors in which their stakeholders operate. It should not be forgotten that in today’s conditions, where everything is interconnected, changes can trigger other changes and bring along completely different changes. In this context, technological changes that many people follow closely and enjoy following will also bring political, economic, and socio-cultural changes. To give an example, changes and developments in health technologies have extended the average life expectancy in today’s conditions, this situation has accelerated the population growth, the population growth has accelerated the use of resources, the need for real estate, the needs of elderly people with longer life spans, the transfer of workers from different countries for the labor force of aging countries.
It can be revealed to what extent the findings obtained as a result of the research to be carried out within the framework of the PEST analysis can affect the business, and depending on how prepared the business is for these changes, which environmental conditions can be an opportunity or a threat for the business, as well as what the business can prioritize according to the degree of impact and degree of preparedness.
PEST analysis is one of the most powerful weapons that businesses can use in their struggle with the uncertainty they face in today’s rapidly changing and unpredictable competitive world.
PEST Analysis on STRATEJİ360
What Is PEST Analysis? How To Do It? As we mentioned before, some issues need to be considered in order to perform the PEST analysis correctly and to increase the effect of the decisions to be taken in this direction. For the PEST analysis to be carried out rationally, it should be future-oriented and not only sector-oriented but also cover other related sectors.
In the PEST analysis tool of STRATEJİ360, 160 different scenarios include the possible changes that businesses may be exposed to until 2030 for 22 different sectors, based on the trend reports prepared by consultancy companies, sector umbrella organizations, international institutions, and organizations such as the EU, OPEC, and the United Nations. Businesses that want to perform PEST analysis on the STRATEJİ360 platform can have the opportunity to develop their perspectives in a wide range of fields, including changes in related sectors they have chosen, as well as the changes concerning the sector in which they operate.
At the same time, on the platform where there are explanations about the effects of possible changes, businesses can easily perform PEST analysis by determining how much each change can affect the business and how prepared the business can be in the face of this change.
