The Importance of a perfectly carried out PEST analysis cannot be overemphasised. Often time the key to success of most businesses could lie in one or more of the following factors; Political, Economical, Technological and Socio-cultural factor. These factors play a great role in decision making whether or not to startup a business or ask for a free CV evaluation from jobberman before sending your resume out to various employers.

I would like to take a perfect example of how a poor PEST analysis landed Visafone communications of Nigeria formerly owned by Jim Ovia now owned by MTN in "hot soup". But first take a look at a typical PEST analysis template.

PEST Analysis Template





Visafone communications a Nigerian owned network provider company that operates on CDMA technology rather than go for the norm GSM. The major difference between a CDMA (Code Division Multiple Access) and GSM (Global System for Mobiles) is, It's much easier to swap phones on GSM networks, because GSM carriers put customer information on a removable SIM card and that's not the case with CDMA, as CDMA carriers use network-based white lists to verify their subscribers, that means you can only switch phones with your carrier's permission.

This major difference is actually a nightmare to customers and thats what broke the camel's back, as customers do not want to be tied to a particular network provider. Visafone had all the Political, Economic and Technological factors covered and left out the socio-cultural factor out of the equation. At this point I would highlight the socio-cultural factors that killed Visaphone's business.

Nigerians perceive mobile phones as a display of social status (lifestyles) which visafone restricted them from.
Nigerians attitude towards imported goods and services.
Poor acceptance of Branded network provider mobile phones.
Attitude towards product quality (once it is expensive then its of high quality)
Nigerians Love a good bargain (they don't mind asking for a price reduction even with price tags on them). CDMA phone were not to be bargained from network providers came in fixed prices and had bad resale value.
Jim Ovia the founder of Visafone and owner of Zenith bank has the political might to pull strings, economically Nigeria was stable as most GSM businesses where in their startup of phase and the CDMA technological platform could match the GSM any day any time. But the Key ingredient which were the socio-cultural factors of the customers responding to the limiting factor of the new technology were taken lightly or not put into consideration. Which led to why Visafone is in the process of being acquired by the leading network provider MTN.

Are you thinking of starting a business here's how to Carry out a proper PEST analysis to circumvent being put out of business by avoidable circumstances.

Political and socio-culture environment factors.....