PEST Analysis incorporates assessments of the political, economic, sociological and technological landscapes for the local environment that a project or new business venture is likely to encounter. This type of analysis takes a much broader view than standard risk assessments and focuses mainly on defining the external threats and opportunities which then enables the development of detailed strategies which are specific to the proposed locale of new operations.
PEST Analysis provides three distinct benefits:
- Detailed PEST Analysis enables a new project or venture to be designed so that it aligns properly with the local environment. A new venture which upsets the nearby populace, goes against local customs, and/or ignores political/regulatory statutes will have a much more arduous timeline than one that takes these concerns into account.
- The “big picture” view provided by PEST Analysis can define opportunities which may be present and enable actions which can take advantage of them while keeping the local happy.
- PEST Analysis provides a roadmap to the completion of a project which avoids roadblocks which may otherwise go unnoticed until it’s too late. By allowing for adaptation to new environments, this type of analysis can be instrumental in saving time, money, and resources by listing potential threats which could derail a project altogether.
PEST Analysis works on two basic principles:
- That any issue which can potentially complicate business activity will raise the cost of that activity as well as extend the date of completion. This reduces profitability which can, in turn, determine whether a project or venture is launched or not.
- That the dynamics of any new locale for a project or venture will constantly present new opportunities and threats. Detailed PEST Analysis can take advantage of new opportunities while avoiding or minimizing effects of localized threats.
PEST Analysis, due to the complexities of assessing the political, economic, sociological, and technological environments of foreign countries, is best left to groups with the savvy and knowhow to deliver accurate assessments like the team led by Dmitrij Harder at Solvo Group. The advantage here is that both the opportunities and risks for a project or venture can be defined in advance which can both avoid pitfalls and maximize profits.