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Diaspora Matters

Business And The Environment-The PESTEL Model

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This writer enjoys formulating and implementing strategies-there is no better joy than developing a strategy and seeing its successful implementation! As ZBIN, we have been busy with a lot of planning so that we can come up with a winning strategy. A strategy that will see us occupying a certain space in the business sector in Zimbabwe and the region. More of this strategy will be visible in the coming few weeks.

This afternoon we have decided to share with you one strategic model that is used whenever one is doing business planning, implementation or review. You need to always be aware of your environment, miss what is happening in the environment and you have set yourself for failure!

Take for instance the prevailing environment in Zimbabwe which is characterised by cash crisis, a slowing economic growth and elections coming next year. If you fail to acknowledge developments in the environment then whatever you may be planning may not be effective, if you plan to purchase equipment from abroad but fail to acknowledge current challenges in accessing forex then your plan is bound to fail.

There are a number of strategic or management tools that management professionals use in planning and assessing the environment and today we would like to zero in on one of them. We will try to simply it so that non finance professionals can comprehend it.

The model is called the PESTEL model and basically means Political, Economic, Social, Technological, Environment and Legal environments. At ZBIN we use this tool every Monday morning during our meetings. We do not want to be caught by surprise, we would like to know threats and opportunities that are presented by the environment that we operate in.

PESTEL Example

Political: You need to be aware of the political environment in the country-we are headed for elections next year! The political heat in the country should be heating up in the next few months, we can expect a lot of policies that affect business in general. New policies being formulated or reviewed, Politicians promising the electorate heaven on earth…we have gone through this path before. Last time we had debts clearance for rate payers who had long outstanding debts with city and rural district councils. Expect surprises, nothing can be dismissed during election times-like already mentioned-we have travelled this path before. So take note of any policy change which can impact the operations of your business.

Economic: Related to Politics is the Economy, always be aware of what is happening in the economy as this directly affects your business. Do follow the Monetary Policy, do follow Budget presentations and review. What is Honourable Chinamasa saying about the economy? What are the government plans in relation to the economy? Is he projecting an economic increase due to the performance of the Command Agriculture? What is the Reserve Bank Governor saying about the current cash crisis? What are they saying about ZIMASSET? As a business person always take an interest in what happens in the economy and various statements that the government issues in relation to the economy.

Social: What are the changes in demographics-population, change in tastes? If you are a business person and you fail to acknowledge that Zimbabwe’s population is now made up of more than 67% youths then you are missing the mark! Youths now dominate the landscape which explains why certain political parties are coming up with youths friendly policies and rallies-they know where  support is-Youths! If you are starting a business and fail to acknowledge the increasing influence of the Christianity community then again you are missing the mark! An estimated 4 million live in the Diaspora and remit close to $1 billion on a yearly basis. If as an entrepreneur you are not talking about the Diaspora then you are missing the mark!

Technology: Technology is playing a crucial role in business, we do not need to go far but refer to the current cash challenges and the promotion of electronic transfers. Do we need to remind you of the widespread use of social media by Zimbabweans?  Whatsapp, Facebook, Instagram, Youtube and Twitter….more and more Zimbabweans are using social media and this attributed to the availability of affordable smart phones. There is significant growth in this sector with more people connecting to the internet. This means more opportunities for anyone who is developing a strategy for business, are you considering opportunities presented by developments in technology?

Environment: Here is an interesting observation that I have noted over the past few years. Whenever there are changes in the climate that results in drought or excessive rainfalls-something interesting happens-tremors affect Zimbabwe! Today the Eastern Highlands was hit by earth tremors around 4:30am! I had anticipated it and discussed this with friends in March, using my little geographical knowledge, I knew that the above normal rains received in the 2016-2017 rainfall season would exert pressure on the earth crust and cause some tremors! Changes in the climate affects everything in Zimbabwe…if we experience good rainfalls then we can expect the economy to perform better! If we experience a drought then we can expect to import more grains and this affects the performance of the economy in an adverse manner.

Legal: This area is broad and covers the regulatory environment, registrations of companies, changes in policies such as the Statutory Instrument SI64! What are the new policies that the government is thinking of or working on introducing? Are they planning on banning anything? You should be aware of this area as it directly affects your business.

Where can you use PESTEL?

Use the model during weekly meetings, whenever you are setting a weekly agenda do think of the PESTEL model. Whenever you are discussing issues be they opportunities or  risks, do consider the PESTEL model. You do not have to use at organisational level-even at personal planning level-are you taking into considerations developments in the environment?

Conclusion

So do not plan in isolation, take note of the environment -developments in the environment in relation to the areas we mentioned above. Is there anything new coming up? How will it affect you in the short, medium and long term? What strategies are you going to put in order to mitigate risks presented or opportunities that will emerge? We end it by saying -Ignore the environment at your own peril!

 

 

 

 

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