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4 evaluate two key factors that will impact your company s success

  1. He works with leaders and their teams around the world to improve organizational performance by helping them to define their strategic direction, increase leadership performance, create cultures that drive innovation and improve project and quality management.
  2. Use an innovation process for all new product development, service delivery, etc.
  3. Walmart, Kroger, Aldi which provide Nestle with many of their sales are slowly beginning to create their own brands and promote them in increasing amounts. SWOT analysis looks at the Strengths, Weaknesses, Opportunities, and Threats of or facing a given company, so in fact, it looks at two internal factors and two external factors.
  4. Nestle cannot prevent these companies from doing so which is what makes this an external factor. Communicate to employees throughout.
  5. We look at tariffs, trade deals as they are developed not only by the economics or business side but what political relationships influence those decisions," Lubrano said.

However, there will always be factors outside of your control affecting how your business operates. One method for discovering and quantifying those factors is the PEST analysis.

  1. Nestle cannot prevent these companies from doing so which is what makes this an external factor. Again, Apple cannot stop this from happening, making it external, but they can still choose how to approach the challenge.
  2. What we mean by this is that these factors can either be as a direct consequence of the actions of the company internal , or completely unrelated and avoidable external. Feiman also suggested that each of factors, including the original PEST factors, should be measured against the following grid.
  3. But many fail to realize their vision and fail to deliver the expected strategic results. Use an innovation process for all new product development, service delivery, etc.

PEST is an acronym for political, economic, social and technological. It's a way of understanding how external forces impact your business. It was created by Harvard professor Francis Aguilar in 1967. It should be included in every business plan, in addition to a SWOT analysisas it is part of risk management and strategy design.

  • For the environmental portion of the analysis, Feiman said to look at environmental evolutions and regulations to determine how they could impact a business;
  • Strategic Planning is a process not an event.

P — Political Environment According to Donna Lubrano, senior advisor at Northeastern Universitythe political environment is an analysis of what politics is doing to the business world.

We look at tariffs, trade deals as they are developed not only by the economics or business side but what political relationships influence those decisions," Lubrano said. Government regulations and legal issues affect a company's ability to be profitable and successful, and this factor looks at how that can happen.

Issues that must be considered include tax guidelines, copyright and property law enforcement, political stability, trade regulations, social and environmental policy, employment laws and safety regulations.

Companies should also consider their local and federal power structure, and discuss how anticipated shifts in power could affect their business. E — Economic The economic factor examines outside economic issues that can play a role in a company's success.

P – Political Environment

For this analysis, look at interest rates, exchange inflation, unemployment, gross domestic product, credit availability and rise and fall of the middle class.

Among the items that should be examined are demographics, population growth rates, age distribution, attitudes toward work and job market trends. The drive to eat healthier, the drive to care for the environment, baby boomers staying in the workforce longer, adults have fewer children later in life. All of these impact how consumers buy houses, cars, etc.

T — Technology Technology plays a huge part in business, and it can impact it either negatively or positively. With the introduction of new products, new technologies and services, a certain marketplace can have a tough time adjusting so it's important to assess the technology from all angles. Specific items that need to be scrutinized include, but are not limited to, government spending on technological research, the life cycle of current technology, the role of the internet and how any changes to it may play out, and the impact of potential information technology changes.

For the legal factor, a company should examine how legal changes and interpretations could impact a company, directly or indirectly, according to Daniel Feiman, managing director at Build It Backwards.

5 Key Factors to Successful Strategic Planning

He advised including changes in laws, global law conflicts and Supreme Court decisions in this portion of the analysis. For the environmental portion of the analysis, Feiman said to look at environmental evolutions and regulations to determine how they could impact a business.

  • Research in Motion is a classic case;
  • Nestle cannot prevent these companies from doing so which is what makes this an external factor.

Look closely at ecological regulations and restrictions as well as endangered species. Feiman also suggested that each of factors, including the original PEST factors, should be measured against the following grid: The more significant benefits include: A greater understanding of your company More effective long-term strategic planning Heightened attention to potential threats and dangers Insight for valuable business opportunities Limitations Solarju, a digital marketer at Housingman Indianoted a few disadvantages as well.

As the data collect[ed] is huge, one needs to carefully utilize it in a better way, and as it is from external sources, one is not sure about the accuracy.

External Factors that Affect a Business

Additional reporting by Katherine Arline. Having worked in the food industry, print and online journalism, and marketing, she is now a freelance contributor for Business News Daily.

  • It's a way of understanding how external forces impact your business;
  • This requires a high involvement and commitment on the part of employees to spend the time required on the projects;
  • Opportunities and Threats, on the other hand, are the external factors taken into consideration in SWOT analysis.

When she's not working, you will find her exploring her current town of Cape May, NJ or binge watching Pretty Little Liars for the 700th time.

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