Pestel Analysis Essay
SOOT analysis and PEST analysis (Notes to accompany templates) The SOOT analysis is an extremely useful tool for understanding and reviewing the company’s position prior to making decisions about future company direction or the implementation of a new business idea. A SOOT analysis can be completed by an individual within the organization (provided they can take an overview of the current situation) but is often best completed in a team or group. The discussion itself is informative, and the quality of the output is better if perceptions are gathered from a number of people.
The PEST analysis is a tool to evaluate external factors. It is often helpful to complete a PEST analysis prior to a SOOT analysis, although it may be more useful to complete a PEST analysis as part of, or after, a SOOT analysis. A SOOT analysis measures a business unit; a PEST analysis measures trends and changes in the market. A SOOT analysis is a subjective assessment of information about the business that is organized using the SOOT format into a logical order that helps understanding, presentation, discussion and decommissioning. The four dimensions are a useful extension of a basic two heading list of pro’s and con’s.
The SOOT analysis template is normally presented as a grid, comprising four sections, one for each of the SOOT headings: Strengths, Weaknesses, Opportunities, and Threats. The SOOT template below includes sample questions, whose answers are inserted into the relevant section of the SOOT grid. The questions are examples, or discussion points, and obviously can be altered depending on the subject of the SOOT analysis. Note that many of the SOOT questions are also talking points for other headings use them as you find most helpful, and make up your own to suit the issue being analyzed.
A SOOT analysis can also be used to examine different aspects of the business, in our case examining the businesses solutions, customers, capabilities and organizational capabilities. Each represents a different element of the business, and requires a separate assessment. In the template provided we suggest specific questions that need to be answered relevant to each aspect of the business. As you work with this framework you may add questions that are relevant to the specific context of your business. Importantly, the SOOT analysis can include many different ideas that make it difficult to process decisions.
It is therefore useful to define the relevant level of significance you will consider when including a factor before completing the analysis. That said, it is important that you identify at least one factor to go in each box, even if you cannot determine the relative importance of a factor. At the evaluation stage you will be better able to determine this, and will have to do this when you use the summary sheet to incorporate the most important elements and prioritize the outcomes. The first time you perform a SOOT analysis it can be challenging, but like most things, the more you do it, the easier it gets.
A SOOT (ex.) matrix using internal/external categories Here is a typical extension of the basic SOOT analysis grid into a useful ‘action-based’ ex. SOOT matrix. The SOOT analysis in this format acts as a quick decision-making Pestle Analysis By Diminuendo tool, quite aside trot the more detailed ATA d d that would typically be Ted into business planning process for each of the SOOT factors. Here the ex. matrix model automatically suggests actions for issues arising from the SOOT analysis, according to four different categories: Strengths (internal) obvious natural priorities Likely to produce greatest ROI (Return On Investment)
Weaknesses (internal) potentially attractive options Likely to produce good returns if capability and implementation are viable. Opportunities (external) Likely to be quickest and easiest to Potentially more exciting and stimulating and rewarding than SIS due to change, implement. Challenge, surprise tactics, and benefits from addressing and achieving Probably Justifying immediate improvements. Action-planning or feasibility study. Executive questions: “What’s actually Executive question: “If we are not stopping us doing these things, provided they truly fit strategically and are realistic already looking at these areas and and absentia? Proportioning them, then why not? ” easy to defend and counter Only basic awareness, planning, and implementation required to meet these challenges. Investment in these issues is generally safe and necessary. Executive question: “Are we properly informed and organized to deal with these issues, and are we certain there are no hidden surprises? ” – and – “Since we are strong here, can any of these threats be turned into opportunities? ” potentially high risk Assessment of risk crucial. Where risk is low then we must ignore these issues and not be distracted by them.
Where risk is high we must assess capability gaps and plan to defend/avert in very specific controlled ways. Executive question: “Have we accurately assessed the risks of these issues, and where the risks are high do we have specific controlled reliable plans to avoid/avert/defend? ” Threats (external) SOOT analysis template Here is a larger illustration of a SOOT analysis that can be used to enhance questions in your template. Subject of SOOT analysis: (define the subject of the analysis here) strengths weaknesses Advantages of proposition?
Capabilities? Competitive advantages? Cusp’s (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing – reach, distribution, awareness? Innovative aspects? Location and geographical? Price, value, quality? Accreditations, qualifications, certifications? Processes, systems, IT, communications? Cultural, attitudinal, behavioral? Management cover, succession? Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach?
Financial? Own known vulnerabilities? Timescales, deadlines and pressures? Scofflaws, start-up cash-drain? Continuity, supply chain robustness? Effects on core activities, distraction? Reliability of data, plan predictability? Morale, commitment, leadership? Accreditations, etc? Processes and systems, etc? Management cover, succession? Opportunities threats Market developments? Competitors’ vulnerabilities? Industry or lifestyle trends? Technology development and innovation? Global influences? New markets, vertical, horizontal?
Niche target markets? Geographical, export, import? Market need for new Cusp’s? Market response to tactics, e. G. , surprise? Major contracts, tenders? Business and product development? Information and research? Partnerships, agencies, distribution? Market volume demand trends? Seasonal, weather, fashion influences? Political effects? Legislative effects? Environmental effects? IT developments? Competitor intentions – various? Market demand? New technologies, services, ideas? Vital contracts and partners? Obstacles faced? Insurmountable weaknesses?
Employment market? Financial and credit pressures? Economy – home, abroad? Seasonality, weather effects? There is some overlap between PEST and SOOT. Similar factors appear in each. That said, PEST and SOOT are certainly two different perspectives: PEST tends to assess a market, including competitors, from the standpoint of a particular proposition or a business. SOOT in business and marketing tends to be an assessment of a business or a proposition, whether it is your own business or (less commonly) a competitor’s business or proposition.
Strategic planning is not a precise science – no tool is mandatory – it’s a matter of pragmatic choice as to what helps best to identify and explain the issues. PEST analysis may useful before SOOT analysis where it helps to identify SOOT factors. Alternatively PEST analysis may be incorporated within a SOOT analysis, to achieve the same effect. PEST becomes more useful and relevant the larger and more complex the business or proposition, but even for a very small coal businesses a PEST analysis can still throw up one or two very significant issues that might otherwise be missed.
The four quadrants in PEST vary in significance depending on the type of business, for example, social factors are more obviously relevant to consumer businesses or a EBB (business-to-business) organization close to the consumer-end of the supply chain, whereas political factors are more obviously relevant to a global munitions supplier or aerosol propellant manufacturer. PEST analysis can be used for marketing and business development assessment and session-making, and the PEST template encourages proactive thinking, rather than relying on habitual or instinctive reactions.
Here the PEST analysis template is presented as a grid, comprising four sections, one for each of the PEST headings: Political, Economic, Social and Technological. Other than the four main headings, the questions and issues in the template below are examples and not exhaustive – add your own and amend these prompts to suit your situation, the experience and skill level of whoever is completing the analysis, and what you aim to produce from the analysis. If helpful refer to a list of these other ‘headings’, for example: Ecological/ Environmental, Legislative/or Legal, Demographic, Ethical, Industry Analysis.
Apply some strategic consideration and pressure to the points you list under these ‘additional’ headings. Ask yourself what the effects of each will be on the ‘big four’ (Political, Economic, Social, Technological). Often your answers will persuade you that the original four-part PEST model is best and that using a more complex series of headings makes it more difficult to complete the analysis fully and strategically. The analysis can be converted into a more scientific measurement by scoring the items in each of the sections. There are no established good or bad reference points – these are for you to decide.
Scoring is particularly beneficial if more than one market is being analyzed, for the purpose of comparing which market or opportunity holds most potential and/or obstacles. This is useful when considering business development and investment options, I. E. , whether to develop market A or B; whether to concentrate on local distribution or export; whether to acquire company X or company Y, etc. If helpful when comparing more than one different market analysis, scoring can also be weighted according to the more or less significant factors.