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Critical evaluation of the significance of PEST factors in organizational strategic planning

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  1. Abstract
  2. Introduction
    1. External marketing environment
    2. The McKinsey 7 S model
    3. The soft S
  3. Organizational external environment
    1. The microenvironment
  4. Implications of the microenvironment in organizational marketing audits
    1. The microenvironment factors of a business organization
    2. Power of buyers
    3. The power of suppliers
  5. Significance of the macro environment forces in marketing audit
  6. The nature of political factors
  7. The impact of economic factors
  8. The significance of socio cultural factors
  9. The relevance of technological factors
  10. Conclusion
  11. Bibliography

PEST factors refer to the political factors, economic factors, societal factors and technological aspects that determine the outcome of business prospects in organizations. It is always important for a business entity to carry out an assessment and evaluation of its market positioning strategies. Indeed, all aspects of marketing planning should always be representative of the true reflection of the current external environment of the organization. This evaluation focuses on the significant aspects of microenvironment and macro-environment and their impact on organizational strategic plans.

External marketing environment of an organization refers to those factors from outside which determine the organization's day to day activities. The environment consists of different factors that combine to form other elements of marketing that are not controllable thus forming limits on the parameters within which marketing strategists are able to execute their plans.

[...] Implications of the Microenvironment in Organizational Marketing Audits The microenvironment factors of a business organization hold the significance of being the factors that are close to the company that bear direct consequences over the company's ability to manage and maintain its markets. The evaluation of an organization's microenvironment can be achieved through the Porters five forces analysis approach. The five forces approach is a viable tool for evaluating business strategy development. The analysis of porter's five forces enables marketing strategists to identify and pursue competitive environments (Porter, 1980). [...]

[...] The PEST analysis identifies nature changes, radical changes, gradual changes, policy changes, and changes in foreign governments to be the key political factors that influence marketing and business planning in organizations. Whereas a company may enjoy peaceful political environment in the home country, the international scene myriads of challenges and business uncertainties that are posed by political factors such as terrorism and human rights issues. The Impact of Economic Factors The execution of marketing plans in an organization should always take into account the elements that characterize a trading economy with focus short- term based and long-term-based interests (Wilson & Gilligan, 1999). [...]

[...] Organizations that create proportionate balance among all the seven elements of the McKinsey 7-S model stand to achieve greater synergy in their overall management processes. Organizational External Environment Evaluation of the forces of external market environment of any organization can be achieved effectively through a critical SWOT analysis (Wilson, 1982). SWOT is a synonym that refers to strengths, weaknesses, opportunities and threats that characterize the products or services provided by a business entity. Wilson (1982) emphasized that an organization can perform an audit of its external environment through thorough SWOT evaluation. [...]

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