PEST

An analysis similar to SWOT is the PEST analysis, which brings together four environmental
scanning perspectives that serve as useful input into an organization’s
strategic planning process:
• Political. This perspective looks at political stability, threats of wars,
regulatory issues, tax considerations, labor problems, laws, and so
forth. For example, as this book is being written, we have:
– Political stability. Mid-term congressional elections have shifted the
dominating party from Democratic to Republican in the U.S. House
of Representatives.
– Threat of wars. The war in Afghanistan continues; arguably, the war
in Iraq is over; an unstable ruler of North Korea recently died and
leadership was assumed by his hardliner son; Iran is clamoring for
its own nuclear weapons and attempting to threaten the world’s oil
supply; and terrorist bombings are rampant.
– Regulatory issues. The recent financial meltdown has resulted in
strengthening the power and authority of regulatory agencies.
– Tax considerations. In an attempt to stimulate the economy,
the �federal government has proposed special depreciation
considerations designed to motivate organizations to purchase
capital equipment.
– Labor problems. Eight and a half percent unemployment continues to
strain our government welfare systems, and public pension legacy
issues continue to mount.
– Laws. Broad-sweeping healthcare and financial reform laws were
passed that will have significant impact to both organizations and
individuals.
• Economic. This perspective looks at currency exchange rates, Â�market
conditions, unemployment rates, inflation factors, interest rates, and
so forth. Current examples include: the U.S. dollar against other
major international currencies, rates of unemployment in the United
States and in other major countries of the world, almost zero percent
inflation, low GDP growth rates in the developed world, outsourcing
to low-cost nations such as India, China, and those of Southeast Asia,
and, in some cases, negative interest rates on bonds.