Importance Of Pest Analysis In Business

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Question 1:
“PEST analysis is used by businesses around the world to devise a strategic approach to their activities”. Discuss this statement highlighting the various components of the said analysis. (25 marks)
The global environment of today is much more complex and different than that of the 10 years before where organizations were struggling to get information about a new market; and today they are drowning in information. Every organization has to react upon external environmental changes and to stay buoyant and be able to protract in the fast moving and innovating business environment, organizations need to constantly keep on upgrading the value of their products to sustain the competitive market and so companies turn to what is known
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It is important that managers understand that not only the internal and the external environment affect a business. But the macro environment that affects the organization’s operations and activities; and just as Michael Porter’s 5 forces helps us evaluate the attractiveness of a specific market and industry, PEST analysis helps us to evaluate the attractiveness of a larger global environment in which an organization operates. In short, PEST give a large helping hand in the construction of contingency plans and acts as a guide for an organization as well as is an effective tool for strategic planning. By the scrutiny of the market and customer segmentation, PEST analysis assist in setting up a strong marketing plan as it explains what differentiates a company’s proposal and targeted customer preference to that of the competitors and informs an organization whether a change or any development is required to keep on going smoothly as well as advises the organization is moving forward or…show more content…
PEST last sphere discuss on Technological factor has boost up many businesses but have also forced businesses to pull down their shutters. To walk along with technology, it demands lots of investments, an example can be the CMT (Compagnie Mauricienne de Textile) Ltd, very famous for its latest technologies, and it can easily bring forward high and premium valued products to its customers that can no doubt be found elsewhere. However, this is also true that its price of manufacturing is so high that now it has to target Grade A clients with small volume orders since its price are not competitive in the

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