PEST, SWOT and Porter’s five forces analysis are three very useful tools for both identifying the threats and opportunities in general and competitive environment and setting up company’s marketing strategy.
What are PEST, SWOT and Porter’s five forces and their usefulness.
PEST is an acronym for political, economic, social and technologic. 1. The political area has huge impact on the operation of the firms(e.g. tax, business law, political stability) 2. The economic condition can also directly influence the general performance of the company(e.g. economy depression, interest rate, exchange rate, inflation rate) 3. As for social factors, by fundamentally determining the target market, it can also be essential for the success or failure of strategies. (e.g. religion, culture, demographic issue) 4. Finally, the technological factors are becoming the majority for mostly organization, which can increasing the benefit as well as decreasing the time and cost. (e.g. the pace of technologies change, incentive of technology) Usually prior to competing SWOT, PEST helps to spot the four elements for better understanding the macroenvironment faced by firms. After analyzing the four factors, it is important for company to identify the key drivers for change, thus focus on that to shape its strategies. Meanwhile, by scanning the general environment, co. can therefore also detect weak signals that make the discontinuity of the environment, which may fundamentally change the competitive environment (Johnson et al, 2011). Ginter and Duncan (1990) argue that macro-environment analysis can act as an early-warning system by giving org. time to anticipate opportunities and threats and develop appropriate response.
SWOT is structured planned method used to evaluated strengths, weakness, opportunities and threats. By using matching and converting, company can either find or develop their competitive advantages. Matching is used to find competitive advantages by matching the...
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