Protection From The Elements

A well-known framework for analyzing a business is called the SWOT analysis (strengths, weaknesses, opportunities, and threats). In addition to this gold standard of practice, the PEST model is also highly valued for assessing risk and external elements that can have a significant impact on our business. The PEST acronym stands for political, economic, social and technological. Let's see how we can use this model to assess any risks now or in the future.

PEST Model

Political

This critical component focuses on areas such as any new or existing legislation, policies that may affect trade in a particular region, tax implications, employment standards, local or regional events, or any international relations that could also have an influence on our business. 

Economic

This component measures the overall vitality of the economy. More specifically though, it helps us to assess the current lending rates, exchange rates, inflation, supply and demand issues, the local GDP, and perhaps relevant activity on the stock markets from a macroeconomic perspective.

Social

This component focuses on any influences based on the psychographics and demographics of our ideal customer. Geographic considerations also play a part in the way of cultural norms where our business operates, the age groups we cater to, and the lifestyle and cultural nuances that define the trading area.

Technological

This component focuses on any technologies that govern the sector we represent. Noteworthy is if there are any notable trends or changes in tech usage, any public or private technological research going on, or government interventions like bans, blocks, or censorship.

So while there is a lot to consider here, it's extremely prudent to review these components and any current or potential threats to our business. If you need help doing such an analysis or have plans to enhance your infrastructure and mitigate any risks, please reach out to our team of virtual affiliates for a helping hand!

"A ship in harbor is safe — but that is not what ships are built for.” John A. Shedd.

Sources: Pest Analysis, Investopedia, Mindtools

www.modernlink.ca,  August 2021