Advantages and Disadvantages of Pest Analysis

Advantages and Disadvantages of PEST Analysis

PEST is a popular analysis to all the businessman and organization because it is the only way to determine and identify the external macro environment correctly. Majority of the organization believe PEST analysis due to the analysis able to bring out few advantages that essential to form a successful organization.

The main advantage that can obtained from PEST analysis is the difficulties and problem that might be occur in future will be anticipate correctly. This is very important for every organization because suitable action can be taken before the problems occur in the future. As a result, the organization able to avoid the cost that used to recover the difficulties.

As mention before, PEST analysis able to anticipate the organization's future difficulties, thus there is no doubt if we say that PEST also can discover future opportunities of the organization. For an example, the situation of economy in the future can be analysis by PEST. When the economy has been shown to grow in future, then there is the opportunity. This enables the organization to grab the opportunity and exploit them in the shortest time.

Besides, PEST analysis also will improve the quality of employee. This is because when a question or problem is been raise up by the PEST, then the strategy thinking among all the employee will be needed to solve the problems. After a certain period, mind and thinking of the employee will be developed and this will increase the productivity of organization. For example, when PEST analysis show the information for IT is the must requirement for a job in future, then the current employee in the organization will strive to equip them with technology knowledge to avoid eliminate in future job market.

However, PEST analysis also similar to other type of business analysis which has also disadvantages. The most serious disadvantage for PEST is the whole analysis is construct based on assumption without any prove. This is very dangerous to the organization especially the small organization because it will cause unsuitable strategy to be taken due to the wrongly assumption. When this happen, the organization will forced to take another strategy and this cause unnecessary cost happen.

The second disadvantage for the PEST is the analysis only consider external environment without concern about other factor that will bring effects to the organization. For example, an organization increase the production of product due to economy growing without consider about the capital of the organization whenever is enough or insufficient. As a result, the strategy that decided will not 100% accurate when uses PEST analysis.

Last but not least, PEST analysis requires a large amount of information to determine the external environment factor. The organization need to carry out many researches to collect all the information