STRATEGY: Revisiting Pest Analysis Q1 2007

In this Briefing Note, Lincoln Crowne & Company provides a high level review of the PEST
Analysis and its application in the client business operation.

As a part of the development of corporate strategy Lincoln Crowne & Company encourages a
macro approach to the challenges that are likely to face the client organisation tomorrow.

Whilst the better known S.W.O.T. analysis is a great tool, LCC believes in fast moving
competitive environments the PEST analysis is key. Simply because the nature of today’s
market dynamics means that external threats investigated as a part of PEST, can now have
material effect on a business in a highly compressed timeframe. It is no longer the case that a
structural threat will take years to materialise. In one manufacturing industry LCC was
working within a product line became virtually obsolete within a 12 month timeframe (way
ahead of all estimates) as consumer demand and lifestyle choice shifted to a new version of the
technology. If that client had not had the vision of understanding the potential impact of
change (and invested in the new technology ahead of time) their organisation would have
stumbled.

One of the complications of the PEST analysis, however, is the sheer volume of potential issues
that might give rise to an effect on the client company. For this reason Lincoln Crowne &
Company spends significant time not only distilling what issues might be real, but also
analysing the time window over which these issues will become financially material.
An example of some of the most simple issues that LCC recommends should be considered are
listed below:

Political / Legal Economic Social Technological

Regulatory Interest Rates (e.g. Demographics / Age Government
Change/change in higher mortgage shift spending on
law repayments / less research / tax
disposable income) incentives
International trade Change in Lifestyle changes Rates of
regulation government ( e.g. more time with technological
spending priorities family) change &
obsolescence
Change of Exchange rate Education levels Energy use and cost
Government fluctuations
Competition Inflation Fashions & fads Commercialisation
regulation & affordability of
technology.

Conclusion: Look to the horizon in your strategy development. Macro change will likely
impact far more quickly than you envisage.
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About Lincoln Crowne & Company

LCC is a boutique investment bank that specialises in engagements across the Australian and ASEAN
nations. The Firm’s activities are broken out into three separate streams of activity: Strategic &
Management Consulting. Mergers & Acquisitions / Transactional. Private Equity. Lincoln Crowne &
Company practices principally in the sectors of TMT, Services, Industrial and Environmental.

For further information contact:

Nicholas Assef
Executive Chairman
E: nicholas.assef@lincolncrowne.com
Grant McCarthy
Managing Director – Asia
E: grant.mccarthy@lincolncrowne.com

Whilst all care has been taken in the preparation of this Briefing Note Lincoln Crowne & Company does not represent that the information contained is accurate,
and parties should undertake independent inquiry. Where data and statistics are presented these have been sourced from a combination of information points
(including government statistical offices) and Lincoln Crowne & Company proprietary activities. This is a general briefing paper only, and in no way should be
taken to construe the provision of advice in any way.