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PEST Analysis

PEST Analysis

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Published by: Edmond Santiago on Oct 01, 2010
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PEST Analysis

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
y y y y

Political Economic Social Technological

The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:

Environmental Scan / External Analysis / Macroenvironment | P.E.S.T. \ Microenvironment \ Internal Analysis

Political Factors Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:
y y y y y

tax policy employment laws environmental regulations trade restrictions and tariffs political stability

Economic Factors Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macroeconomy:
y y y y

economic growth interest rates exchange rates inflation rate

Social Factors Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:
y y y y y

health consciousness population growth rate age distribution career attitudes emphasis on safety

Technological Factors Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:
y y y y

R&D activity automation technology incentives rate of technological change

External Opportunities and Threats The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis. http://www.quickmba.com/strategy/pest/

g.g. and competitive rivalry.Five Forces Analysis Five Forces Analysis helps the marketer to contrast a competitive environment. personal contacts or knowledge that larger companies do not own or learning curve effects.e. how much will it cost for the latest technology? Ease of access to distribution channels e.g.Analyzing the environment . Do our competitors have the distribution channels sewn up? Cost advantages not related to the size of the company e. For example. The threat of entry. such as PEST analysis.g. the threat of substitutes. y y y y y y Economies of scale e. Will competitors retaliate? Government action e. Dell would analyse the market for Business Computers i.g. the power of buyers. the power of suppliers. Five forces analsysis looks at five key areas namely the threat of entry. The high or low cost of entry e. It has similarities with other tools for environmental audit. but tends to focus on the single. the benefits associated with bulk purchasing. will new laws be introduced that will weaken our competitive position? . stand alone. business or SBU (Strategic Business Unit) rather than a single product or range of products. one of its SBUs.

small suppliers e. large players in a market e.g. Where there is generic substitution (competing for the currency in your pocket) e. small farming businesses supplying the large grocery chains. the large grocery chains. and suppliers and buyers in the market attempt to control.g. Competitive Rivalry y This is most likely to be high where entry is likely. email for fax Where there is substitution of need e.html .g. Microsoft. there is the threat of substitute products.g. We could always do without e.g.g. Video suppliers compete with travel companies. Gas/Petrol stations in remote places. Pizza Hut. cigarettes. Brewers buying bars. Power is high where the brand is powerful e. y y y This is high where there a few. from one fleet supplier of trucks to another.g. Customers are fragmented (not in clusters) so that they have little bargaining power e. The cost of switching between suppliers is low e. The power of suppliers. There is a possibility of the supplier integrating forward e. The power of suppliers tends to be a reversal of the power of buyers. better toothpaste reduces the need for dentists. Cadillac. The Champagne brand cannot be copied.g.g.com/lesson-store/lesson-five-forces. http://marketingteacher. Switching from one software supplier to another.g. This desensitises the influence of the environment. This is why it is always seen in the center of the diagram.g. The threat of substitutes y y y Where there is product-for-product substitution e. If there are a large number of undifferentiated. The power of buyers.y How important is differentiation? e. y y y y Where the switching costs are high e.g.

Individuals may save rather than spend. recession and recovery BOOM: A period of fast economic growth. RECOVERY: A period when the economy moves between recession and a boom.BUSINESS CYCLE The economy tends to experience different trends. Firms may lose confidence and reduce investment. Consumer confidence may lead to extra spending. RECESSION: A period where economic growth slows down and the level of output may actually decrease. Unemployment is likely to increase. Business confidence may be high leading to increased investment. unemployment is low. Output is high due to increased demand. Confidence may begin to suffer. SLUMP: A period when output slows down due to a reduction in demand. . slump. These can be categorised as the trade cycle and may feature boom.

Prices start to fall . Fall in FEELGOOD FACTOR .Businesses cut back on production .Businesses produce more goods . There is a FEELGOOD FACTOR .Consumers spend less money.WHAT HAPPENS IN A BOOM? .Less money is spent by the Government on unemployment benefits .Consumers spend more money.Prices tend to increase due to extra demand (page) WHAT HAPPENS IN A RECESSION? .More money is spent by the Govt on unemployment benefits .More money is collected by the Government in income tax and VAT .Some businesses may go bankrupt .Businesses invest in more machinery .Individuals may lose their jobs .Less money is collected by the Govt in income tax and VAT .

htm The Business Cycle Economic growth is not a steady phenomenon. Used as such. an expansion of above-average growth a peak a contraction of below-average growth a trough or low-point The troughs then are followed by periods of expansion and the cycle generally repeats. The financial media generally considers two consecutive quarters of negative GDP growth to indicate a recession. it tends to exhibit a pattern as follows: 1.http://tutor2u. 2.S. though not in a regular manner. a popular indicator of the business cycle in the U. . 3. rather. These fluctuations in economic growth are known as the business cycle and are depicted conceptually in the following diagram: The Business Cycle Indicators of the Business Cycle Because the business cycle is related to aggregate economic activity.net/economics/gcse/revision_notes/big_picture_business_cycle. 4. the GDP is a quick and simple indicator of economic contractions. is the Gross Domestic Product (GDP).

a duration of 10 years. government initiated policies with the intent to minimize the severity of economic contractions.However. the National Bureau of Economic Research (NBER) weighs GDP relatively low as a primary business cycle indicator because GDP is subject to frequent revision and it is reported only on a quarterly basis (the business cycle is tracked on a monthly basis). Whether the business cycle has become less intense has practical importance because after World War II the U.com/econ/macro/business-cycle/ . Business Cycle Intensity Over Time Many economists believe that the business cycle has become less pronounced. While there is economic data to support a diminished business cycle. Whether the business cycle really has declined in severity is a question that remains open to debate.S. exhibiting briefer and shallower economic contractions. By comparison. The NBER relies primarily on indicators such as the following: y y y employment personal income industrial production Additionally. other economists argue that the data prior to 1929 was not very accurate and tended to overstate the magnitude of the economic swings. http://www. the longest U.quickmba. the contraction that began in 1929 and that initiated the Great Depression lasted 43 months from August 1929 until March 1933. Notable Business Cycle Expansions and Contractions According to the National Bureau of Economic Research.S. indicators such as manufacturing and trade sales are used as measures of economic activity. economic expansion on record began in March 1991 and lasted until March 2001. so a decrease in the intensity of the contractions would support the arguments of those who advocate such policies. The longest economic contraction in the NBER databse was the 65 month contraction from October 1873 until March 1879.

challenges and financing sources you will need to succeed. What you focus on today will change and require different approaches to be successful. Learn what upcoming focuses. It will be faced with a different cycle throughout its life. Other focal points include: deciding on a business ownership structure. . A business goes through stages of development similar to the cycle of life for the human race. The same goes for your small business. experience and passions. This is the very conception or birth of a new business. With the passage of time. finding professional advisors. The 7 Stages of the Business Life Cycle Click on the stages for more information. Seed The seed stage of your business life cycle is when your business is just a thought or an idea.Business Life Cycle Your business is changing. Do not spread money and time resources too thin. y y Challenge: Most seed stage companies will have to overcome the challenge of market acceptance and pursue one niche opportunity. your company will go through various stages of the business life cycle. Focus: At this stage of the business the focus is on matching the business opportunity with your skills. and business planning. Parenting strategies that work for your toddler can not be applied to your teenager.

Money Sources: Banks. customers. y y y y Challenge: The biggest challenge growth companies face is dealing with the constant range of issues bidding for more time and money. You need to learn what profitable needs your clients have and do a reality check to see if your business is on the right track. and banks. Products or services are in production and you have your first customers. WNB products to consider: Classic Checking Account / Business Savings Account / SBA Resources / Minnesota SBDC / Minnesota Community Capital Fund Back to top Start-Up Your business is born and now exists legally. but competition is surfacing.y y Money Sources: Early in the business life cycle with no proven market or customers the business will rely on cash from owners. New employees will have to be hired to deal with the influx of business. friends and family. Other potential sources include suppliers. y y y y Challenge: If your business is in the start-up life cycle stage. Better accounting and management systems will have to be set-up. grants and leasing options. family. Money Sources: Owner. customers. government grants and banks. Focus: Growth life cycle businesses are focused on running the business in a more formal fashion to deal with the increased sales and customers. Revenues and customers are increasing with many new opportunities and issues. suppliers. WNB products to consider: Line of Credit / Equipment Financing / Construction Loan / Commercial Real Estate Loan / Health Savings Account / Remote Deposit / Cash Management / Business Credit Card Back to top . partnerships. it is likely you have overestimated money needs and the time to market. profits. WNB products to consider: Seed Stage Products / Working Capital Loan / Line of Credit / Equipment Financing / Business Internet Banking / Bill Payer / Credit Card Processing Back to top Growth Your business has made it through the toddler years and is now a child. Effective management is required and a possible new business plan. The main challenge is not to burn through what little cash you have. Learn how to train and delegate to conquer this stage of development. grants. Profits are strong. Focus: Start-ups require establishing a customer base and market presence along with tracking and conserving cash flow. friends.

Focus: Add new products or services to existing markets or expand existing business into new markets and customer types. Business life has become more routine. This stage is often the choice of the business owner to gain a larger market share and find new revenue and profit channels. The biggest issue is how long the business can support a . Sales growth is not explosive but manageable. You have worked hard and have earned a rest but the marketplace is relentless and competitive. new investors and partners. y Challenge: Businesses in the mature stage of the life cycle will be challenged with dropping sales. banks. licensing. and negative cash flow. investors and government. WNB products to consider: Acquisition Financing / Private Financial / Line of Credit / Equipment Financing / Construction Loan / Commercial Real Estate Loan / Investment Brokerage Back to top Mature Year over year sales and profits tend to be stable. To compete in an established market. however competition remains fierce.Established Your business has now matured into a thriving company with a place in the market and loyal customers. profits. banks. Moving into unrelated businesses can be disastrous. Stay focused on the bigger picture. Money Sources: Joint ventures. Focus should be on businesses that complement your existing experience and capabilities. WNB products to consider: Premium Checking Account / Business Money Fund Account / Sweep Account / Private Financial / 401K Planning / Investment Brokerage / Health Savings Account / Remote Deposit / Cash Management / Business Credit Card / Line of Credit Back to top Expansion This life cycle is characterized by a new period of growth into new markets and distribution channels. Focus: An established life cycle company will be focused on improvement and productivity. competitors or changing customer tastes can quickly end all you have work for. Issues like the economy. you will require better business practices along with automation and outsourcing to improve productivity. y y y y Challenge: Moving into new markets requires the planning and research of a seed or start-up stage business. y y y y Challenge: It is far too easy to rest on your laurels during this life stage. Eventually sales start to fall off and a decision is needed whether to expand or exit the company. Money Sources: Profits.

y y y y Challenge: Selling a business requires your realistic valuation. Set-up legal buy-sell agreements along with a business transition plan. If you decide to close your business.com/BusinessBanking/BusinessLifeCycle. owners. Focus: Get a proper valuation on your company. the challenge is to deal with the financial and psychological aspects of a business loss. customers. Welcome to the world of cake decorating! . Or it can mean shutting down the business. Money Sources: Suppliers. but what is its real value in the current market place. WNB products to consider: Private Financial / 401K Planning / Employee Stock Ownership Plans (ESOP) / Investment Brokerage / Health Savings Account / Remote Deposit / Cash Management / Line of Credit Back to top Exit This is the big opportunity for your business to cash out on all the effort and years of hard work. Focus: Search for new opportunities and business ventures.exit. Money Sources: Find a business valuation partner. Cutting costs and finding ways to sustain cash flow are vital for the mature stage. high-paying job that lets you use your creativity to decorate fun or elegant cakes and cupcakes.. and banks. management and competitive barriers to make the company worth more to the buyer.winonanationalbank.aspx Start Your Own Cake Decorating or Cupcake Business Get Paid to Decorate Cakes at Home or Open Your Own Cake or Cupcake Shop Imagine having a rewarding.. WNB products to consider: Acquisition Financing / Employee Stock Ownership Plans (ESOP) / Investment Brokerage / Trust http://www. It may have been years of hard work to build the company. Ask is it time to move back to the expansion stage or move on to the final life cycle stage.y y y negative cash flow. Look at your business operations. Consult with your accountant and financial advisors for the best tax strategy to sell or close-out down business.

or intricately piped buttercream lacework or roses. such as gumpaste flowers. . interesting. And perhaps most importantly your cake decorating "work" will be fun. you may be paid to create the centerpieces of some of the most memorable occasions of people's lives. You could earn $50. Cake decorators design. If you start your own cake decorating business or cupcake business you will enjoy the freedom of being your own boss.As a cake decorator. or even more if you open your own cake or cupcake shop. just to name a few. There are few jobs that offer so many benefits. bake and decorate creations that are almost as much fun to look at as they are to eat. and personally rewarding. marzipan figurines. When you become a cake decorator (also known as a cake designer) you will have the satisfaction of making your vision a reality. royal icing. such as: y y y y y y y y y Gourmet cupcakes Baby shower cakes Wedding cakes Picture or character cakes Children's birthday cakes Anniversary cakes Cupcake bouquets Whimsical or topsy-turvy cakes And more Cake decorators may also choose to specialize in a style or theme of cake decorating. As a professional cake or cupcake decorator you could design and decorate all types of cakes and cupcakes.000 or more per year from home. or you might choose to specialize in decorating the type of cake you enjoy the most. fondant cut-outs.

The author of this guide is Jennifer James. crumb-free. the FabJob Guide to Become a Cake Decorator is for you! In this e-book you will discover how you can get started and succeed in the exciting business of cake decorating. The guide covers topics of vital importance to anyone who wants to become a cake decorator. No special education or experience is necessary to become a cake decorator. You can start a cake decorating. support and transport a tiered or stacked cake How to put together a professional cake decorator's kit A list of cupcake-specific tools and supplies you'll need (as well as ones experts say to avoid) How to create and decorate cake boards and presentation boards How to use fondant and gumpaste for elegant-looking cakes (it's easier than you think!) y y y y y How to get great results when piping buttercream designs on your cakes and cupcakes Advice about using fresh flowers on cakes How to use new cake design techniques such as airbrushing and edible ink photo transfers Four fantastic cupcake decoration ideas Step-by-step instructions for two Wilton cake and cupcake projects to try out your new skills How to Start a Cake Decorating or Cupcake Business y y y y Where to start once you've decided to go into the cake decorating and cupcake business How to choose a cake decorating specialty (and what the hottest trend is right now) How to start a cake decorating or cupcake business as inexpensively as possible An overview of options for your cake decorating or cupcake business: . ready-to-decorate cupcakes and cakes How to assemble. If you would like to become a cake decorator and be paid to decorate cakes or cupcakes.As long as you have the desire. In the cake decorator guide she shares insider tips and expert advice from cake decorating business experts to help you achieve success with your own cake decorating business. including: How to Decorate Cakes and Cupcakes y y y y y y y y How to select the right style of cake or cupcakes for an occasion What special elements to consider when creating cakes or cupcakes for weddings (and ways to boost your profitability with "little extras") How to prepare flat-topped. or cupcake business and become a cake decorator immediately. you can become a cake decorator. cake design. a leading writer and editor of career guides.

leases and design of your cake or cupcake shop What you should know about getting licensed to sell food products from home How to find and rent a commercial kitchen to bake cakes and cupcakes Equipment and supplies you need to start a cake decorating or cupcake business and where to get what you need o o How to Market and Sell Cakes and Cupcakes y y y How to set your per-serving or per-cupcake prices for profit Developing a marketing plan for your cake decorating or cupcake business Creating marketing tools for your cake decorating or cupcake business to sell your cakes or cupcakes including: o Brochures for your cake decorating or cupcake business o Sample cake designs o A cake decorating or cupcake portfolio o Your website for your cake decorating or cupcake business Identifying potential clients for your cake decorating or cupcake business How to market your cake decorating or cupcake business effectively including: o Where and how to advertise your cake decorating or cupcake business o How to get free publicity for your cake design or cupcake business o How to develop strategic partnerships and get referrals from other businesses when you start a cake decorating or cupcake business Marketing through wedding expos and wedding directories Accepting payments from customers How to take and fill orders from your clients y y y y y PLUS. including: o Checklist of pantry supplies o Checklist of baker's equipment o Checklist of cake decorating supplies o Sample client questionnaire o Sample contract/order form o Sample business plan for a cake shop y . including how to get repeat business Helpful checklists and samples of what you need to start your cake decorating or cupcake business. you will discover: y y y y How to develop the skills you will need as a cake decorator Dozens of handy tips for great cake and cupcake baking from the experts How to safely transport clients' cakes and cupcakes Step-by-step information on how to run a retail cake or cupcake shop including: o How to plan your grand opening o How to find and hire great cake or cupcake shop employees o Increasing sales.y y y y y y y y Starting a cake decorating or cupcake business from your own home Buying an existing cake or cupcake business (including how to find cake or cupcake shops and franchises for sale) o Opening a new cake or cupcake shop How to create a business plan for your cake or cupcake business (includes a sample business plan for a retail cake shop) Choosing a name for your cake decorating or cupcake business Where to get start-up financing for your cake decorating or cupcake business (includes sample start-up budgets) Computer software that can help you with your cake or cupcake inventory Choosing a retail location. plus information about permits.

Tenemos un traductor para mensajes de correo electrónico.com/cakedecorator. help you avoid some costly mistakes. Para el español no se habla español. and give you information you need to become a cake decorator and start your own cake decorating or cupcake business.fabjob.comsi usted nos necesita usar nuestro traductor. and chances are they will not include specific information about starting a cake decorating or cupcake business. The information in this cake decorating guide can save you many hours of research. . http://www. Envíanos un email a sales@bakemarketing.asp We look forward to serving you! For all your needs in equipment contact us at 615-441-3370 New and Used Bakery and Restaurant Equipment Don't forget we have Space Racks Front load and Side load Call Patrick or Vicki for Special Price this month Esperamos poder servirle! Para todas sus necesidades en equipos contacto con nosotros en 615-441-3370 Nuevos y Usados Equipo de panadería. It can cost hundreds of dollars to take courses on starting a business. Gracias If you don't see something you are in need of on our website please contact us. The FabJob Guide to Become a Cake Decorator contains some of the best business advice you could get from other sources. and more.y y o Checklist for finding the perfect location o Sample cake shop floor plan o Sample lease agreement o Shop operations checklist o Sample start-up budgets o Sample daily sales report o Sample press release Links to free serving and pricing charts And more! (including free updates) You can have all this and more for an incredible price. restaurante BAKEMARKETING equipos nuevos y usados panadería. Si usted no habla Inglés y la necesidad de enviarnos un correo electrónico en español que puede responder a que en español también.

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