Strategic Management: PEST Analysis and Porter's Five Forces

Strategic Management
Student:
Professor:
Course title:
Date
Introduction
For a successful business venture, analysis is inevitable. A business person must constantly ensure that they conduct routine analysis to determine the position of the business in relation to the market. This is why tools and models such as the PEST analysis and Porter's forces of the market are used as guidelines for businesses. Strategic management is unavoidable for any organization that seeks to remain competitive. Tools such as those mentioned herein above play an important role in enhancing sustained competitive advantage. This discussion looks as the importance of strategic management in corporations today. This is especially in the light of having sustainable competitive advantage in the market.
PEST Analysis
PEST is an acronym that refers to political, economic, social and technological factors. This analysis seeks to determine how these factors have an effect on the business organization. The management of a business must always consider the political environment and its effects on the business. For many years, America has enjoyed a polite political climate, one that has not had any serious effects on the business. Perhaps due to the democracy of the country which is believed to have come of age, the politics of America do not very much affect their businesses. What would be of interest as far the corporate environment is concerned is the expansion plans. Being a company that is rapidly growing, the need for expansion to new markets has become imminent. Competitive advantage means having a niche which even rival companies cannot match up to. For this reason, the company must ensure that the new markets into which the expansions are directed have a good political climate (Looney & Ryerson, 2011). More often a stable political environment means that investors are not afraid to come in. The vice-versa is true. This is a crucial area that cannot easily be ignored because the impacts are so direct and can harm the business.
Market rates of foreign exchange and interest among others must be considered when conducting an analysis (Harley, 2012). The economic environment forms one of the most important pillars in any business. A case in point would be the crisis that hit the global economy in 2008. Virtually all businesses were hit hard. Even the big giants in the corporate industry were no exception. The ripple effects of this factor directly determine whether or not the business will bounce back into the market. In recent years, companies that were previously in the market have slowly crawled back. Even when hard hit good strategic management plan will ensure that the business manages to slide back into her position in the market. Any red flags cannot be ignored and a strategy must be devised to counter any negative effects arising from the same. They contribute directly to strategic management and play an important role. This is especially in determination of the next step that the organization will take.
Social factors have very much to do with the patterns, preferences and behaviors of consumers within given market (Pride, 2012). There are certain factors that inform trends of customers. The trends change with time. Every business must be in tandem with the currents trends and preferences as this is the only way to attract them. For example, there are motorcycle designs that were in place a couple of years back. Customers have since outgrown some of them and instead embraced the new designs. It would be a mistake for a motorcycle company to bring into the market the old trends as the customers may not have good reception for them. This means that study of the market to understand what exactly the customers want is inevitable. Researches of the market form a fundamental point in strategic management. It contributes that leads to establishment of competitive advantage. Establishing competitive advantage for any organization is a continuous journey. This is owing to the dynamic nature of the market. The constant changes in the market
Technological factors are those that concern new invocations. New changes keep taking place in the business world due to development of technology. Every product that an organization comes up with must be done in tandem with the current technological trends. For instance, coming up with a mo...