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Three ways of Industry Analysis – Part 2

This article is the continuation of the part – 1. Read it here PART 1 before continuing. In the current article, I will cover the remaining two ways industry analysis i.e., PEST Analysis and SWOT Analysis.

PEST AND SWOT ANALYSIS

2. PEST Analysis

PEST Analysis can be helpful to the business owners who want to expand their business in other countries.

The full form of PEST is Political, Economic, Socio-cultural and Technological analysis. It considers all the above factors and some models considers Legal, Demographics, Ethics, and Environmental Factors.

Political Analysis

Political Analysis includes the structure of the economy i.e., whether the structure is  Communist, Socialist or Capitalist. The owner has to decide which kind of economy is suitable for his investments. This also includes analysis of stability in the legislation, finance, ease of doing business, minimal violence, Intellectual Property protection, Industry safety regulations.

Economic Analysis

Economic Analysis includes the type of economy the country is operating. It may be Traditional, Command, Free Market or Mixed Economy. You can read the difference between these economics by clicking this me.

Economic Analysis also considers the performance of financial markets, inflation, interest rates, labor costs, the skill of the workforce, infrastructure facility, imports, and exports, stability in the monetary policies.

Socio-Cultural Analysis

The socio-cultural analysis considers the lifestyle of people, health, education, skill development, age. By considering all these factors the company can design the products which are suitable for that particular demographics.

Technological Analysis

Advancement in technology helps the company in increasing efficiency, reducing product cycles, reduction in the complexity, reducing the production costs, etc., Technologically advanced. countries attract more investors.

3. SWOT Analysis

SWOT stands for

  • Strength
  • Weakness
  • Opportunity
  • Threats

By performing a swot analysis investor can get a realistic idea of the business. Strengths and Weakness are internal factors. These will be under the control of the company and its management depends on the owners of the company. While Opportunity and Threats are the external factors.

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