Haris Ahmed from Chicago: Using the PEST Analysis for Identifying Changes

Haris Ahmed of Chicago consulting firm Pragmatium Consulting Inc. has provided numerous organizations with a high level of assistance in change management. Read his blog about the PEST Analysis below:

According to legendary military strategist Sun Tzu, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” What did he mean by this? And what can business owners and managers learn from the great Sun Tzu about dealing with change?

First, we must define and differentiate strategy from tactics. In its simplest definition, strategy can be thought of as the plan, while the tactics are the actions taken by the company which are in accordance to the plan (strategy) to meet the overall objectives. In this regard, we can conclude that proper planning and action go hand in hand if victory were to be achieved.

When it comes to change management, adapting to change smoothly and with minimal damage to the company’s reputation or market share, for instance, can be considered as the strategy. On the other hand, how to implement the inevitable change is in the realm of tactics or the procedures and maneuvers that the company will engage in to deal with the change.

However, before a company should even think about their plan or the actions they’ll take accordingly, they should look first into conducting a PEST Analysis as this framework can greatly help them analyze and break down further the different components and aspects of the change.

The PEST Analysis was first developed by Harvard professor Francis Aguilar in 1967 through his book “Scanning the Business Environment”. PEST is an acronym for the Political, Economic, Socio-Cultural, and Technological factors in the surrounding business environment. As a strategic planning tool, the PEST Analysis can give business owners and managers a bird’s eye view of the business landscape so they may take advantage of any opportunity that presents itself.

Additionally, the PEST Analysis can help them further refine the direction of the change they are steering the business towards. Let’s take for example a small restaurant owner who wants to have a stronger digital presence. Based on the PEST analysis, he/she should take note of the current government’s stability, tax policies, and other economic agendas for the Political factors. For the Economic factors, he/she should look at inflation, interest and exchange rates, as well as unemployment trends as this can affect his/her customers’ purchasing power.

Meanwhile, for the Socio-Cultural changes, these could be his/her customers’ lifestyle choices, level of health consciousness, and attitudes towards eating out versus preparing meals at home. Lastly, for the Technological factors, he/she may want to invest in building a social media presence in order to access his/her customers, or simply offer free Wi-Fi connection for the enjoyment of customers.

The PEST Analysis has several variations, considering the legal and environmental factors, ethics, demographics, and intercultural factors. Regardless of which framework you go with, this handy strategic tool can help your business navigate the broad macro-environmental landscape and ultimately, lead you down the path of victory.

To read more from Haris Ahmed of Chicago-based consulting firm Pragmatium Consulting Inc., stay tuned to this page.



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