The Best way to do PEST Analysis This slideshow provides a brief tutorial on a new diagrammatic method, developed at the world famous Henley Business School in the UK. The new method overcomes some of the major weaknesses of traditional PEST /‘PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis. Traditional PESTLE tends to generate a random list of unrelated facts – not very useful for understanding your business, developing strategy or convincing other business leaders. We show how you can use the PESTLEWeb method to tell a clear and compelling ‘story’ that leads from key issues to business threats and opportunities. PESTLEWeb is supported by a new tool at www.PESTLEWeb.com. The new web-based tool helps you create great graphics and enables the automatic generation of outline reports and tabulated data to support your paper or presentation.

1. The Best way to do
PEST Analysis
A brief introduction to the PESTLEWeb method
Dr Rob Collins
www.PESTLEWeb.com
© Rob Collins 2010

2. Setting expectations
• Don’t expect to be ‘done in 10 minutes’
• It will take time to do an analysis that is:
• High quality
• Information rich
• Rigorous and Systematic
• Valuable to your business
• (or gets a top grade for your business strategy paper)
• Every step of the analysis increases..
• your understanding
• your sensitivity to your business environment
© Rob Collins 2010

3. Overview of the Method
1. Initial generation
2. Cause consequence links
3. Business Impacts
4. Research
5. Importance
6. Future Scenarios
7. Communicate!
© Rob Collins 2010

4. Step 1: Initial Generation
• If you have already identified any PEST /
PESTLE issues make a list of these
• Use checklists to help you identify some
issues
• A checklist is included in this slide-deck
• Start drawing!
• Copy each item into a
block in the diagram
• Label the block with
the correct type
© Rob Collins 2010

5. Step 2: Cause/Consequence Links
• For each PESTLEWeb block look for
possible causes and consequences…
• Try to identify industry relevant items
• Add these to the diagram
• Look for threads or a
or stories that run
through the diagram
• Link the PESTLEWeb
elements together to
show the logic of your
argument
© Rob Collins 2010

6. Step 3: Business Impacts
• As consequences for your business add
these to the diagrams as “impact” boxes
© Rob Collins 2010

7. Step 4: Research
• Don’t expect to have all of the
knowledge already
• Use the emerging PESTLEWeb to
guide your search
• Form hypotheses and go search for
evidence
• Engage in conversations with people
with knowledge in specific areas
• Ask ‘tough questions’
© Rob Collins 2010

8. Step 4: Importance
• Review each item and decide the
relative:
• Importance to your business
• Risk it may pose
• Opportunity it may
offer
• Likelihood of
occurrence
© Rob Collins 2010

9. Step 5: Future Scenarios
• Consider the important issues and threads
on your PESTLEWeb model
• What are the possible future scenarios
within these threads?
• Consider scenarios that:
• Would have most impact
• Are most likely
• Are reasonably differentiated
• Give the threads titles so you can talk
about them
• E.g. “Reversal in trend towards globalisation”
© Rob Collins 2010

10. Step 6: Communicate!
• Use your PESTLEWeb model to
communicate with others
• Draw people into the ‘Strategic
Conversation’
• Search out diverse views
• Challenge the analysis and scenarios
• Challenge your projects against your
PESTLEWeb view of the world
© Rob Collins 2010

11. PESTLE Checklist: Political
• Political stability • Wage legislation - • Regulatory bodies and
• Risk of military invasion minimum wage and processes
• Legal framework for overtime • Government policies
contract enforcement • Mandatory employee • Government term and
• Intellectual property benefits change
protection • Industrial safety • Trading policies
• Trade regulations & regulations • Funding, grants and
tariffs • Product labeling initiatives
• Favored trading partners requirements • Home market pressure
• Anti-trust laws • Ecological/environmental groups
• Pricing regulations legislation • International pressure
• Taxation - tax rates and • Current legislation groups
incentives • Future legislation • Wars and conflicts
• Work week • International legislation
© Rob Collins 2010

12. PESTLE Checklist: Economic
• Type of economic system • Labor costs Economic • Taxation specific to
in countries of operation growth rate product/services
• Government intervention • Discretionary income • Seasonality issues
in the free market • Unemployment rate • Market/trade cycles
• Comparative advantages • Inflation rate • Specific industry factors
of host country • Interest rates • Market routes trends
• Exchange rates & • Home economy • Distribution trends
stability of host country • Economy trends • Customer/end-user drivers
currency • Overseas economies • Interest/ exchange rates
• Efficiency of financial • General taxation • International trade and
markets • Business cycle stage (e.g. • Monetary issues
• Infrastructure quality Prosperity, recession,
• Skill level of workforce recovery)
© Rob Collins 2010

13. PESTLE Checklist: Social
• Demographics • Lifestyle trends • Fashion and role models
• Class structure • Demographics • Major events and
• Education • Consumer attitudes and influences
• Culture (gender roles, etc.) opinions • Buying access and trends
• Entrepreneurial spirit • Media views • Ethnic/religious factors
• Attitudes (health, • Law changes affecting • Advertising and publicity
environmental social factors • Ethical issues
consciousness, etc.) • Brand
• Leisure interests • Consumer buying patterns
© Rob Collins 2010

14. PESTLE Checklist: Technological
• Recent technological • Research funding • Consumer buying
developments • Associated and dependent • Mechanisms/technology
• Technology's impact on technologies • Technology legislation
product offering • Replacement • Innovation potential
• Impact on cost structure technology/solutions • Technology access
• Impact on value chain • Maturity of technology • Licensing, patents
structure • Manufacturing maturity • Intellectual property issues
• Rate of technological and capacity
diffusion • Information and
• Competing technology communications
© Rob Collins 2010

15. What others are saying …
 Your business needs ‘radar’ to
scan your current environment
for threats and opportunities
Day, G.S. and Schoemaker, P.J.H
“Peripheral Vision: Detecting the weak signals
that make or break your company”
 Your strategic success depends
on a deep understanding of
future scenarios
Van Der Heijden, (1996)
“Scenarios: The art of Strategic Conversation”
© Rob Collins 2010

16. PESTLEWeb turns a list of
TM
unrelated facts into a
– Convincing ..
– Relevant …
– Well-structured ..
…argument
© Rob Collins 2010

17. PESTLEWeb TM
Picture your Business Environment
www.PESTLEWeb.com
© Rob Collins 2010