Evaluate the importance of PEST analysis to the directors as they consider whether PGC should supply tea.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. Knowledge: Explanation of PEST as a technique of strategic analysis
2. Knowledge: Understanding of role of other strategic analysis techniques such as Porter's Five Forces
3. Knowledge: Understanding of role of other strategic analysis techniques such as SWOT
4. Knowledge: Understanding of role of other strategic analysis techniques such as Core competencies
5. Knowledge: Knowledge of business vision/mission statements and objectives
6. Knowledge: Role of strategic analysis in strategic management and planning
7. Knowledge: Strategic Choice techniques that would be used in making decision
8. Knowledge: Strategic Choice techniques that would be used in making decision: Decision tree, investment appraisal, Force Field Analysis
9. Application: SWOT, Porter's 5 Forces analysis carried out and/or core competencies used: Core competency – marketing hot drink ingredients (Strength in SWOT).
10. Application: SWOT, Porter's 5 Forces analysis carried out and/or core competencies used: Porter - lower degree of rivalry in market for supplying tea.
11. Application: Link to mission statement.
12. Application: Use of PEST information in Table 3.
13. Application: Use of PEST information in Table 3: Possible tax on coffee.
14. Application: Use of PEST information in Table 3: Stable wholesale price of tea.
15. Application: Use of PEST information in Table 3: Rising cost of coffee beans.
16. Application: Use of PEST information in Table 3: Higher mark-up on tea.
17. Application: Use of PEST information in Table 3: Tea healthier than coffee.
18. Application: Use of PEST information in Table 3: Younger consumers increasingly prefer tea.
19. Application: Supplying tea to existing customer types.
20. Application: Reference to the first option (opening cafes).
21. Application: Reference to role of ERP.
22. Application: Lack of set objectives.
23. Analysis: Consideration of why techniques lead to the recommendation or not.
24. Analysis: Consideration of why the analysis might reject café alternative option.
25. Analysis: Anticipating changes to the external environment will enable PGC to take decisions to reduce risk and take advantage of opportunities.
26. Analysis: Analysis of how other forms of strategic analysis might guide strategic decisions: Identification of weaknesses that need to be addressed when making decisions or alternative sought, e.g. financing.
27. Analysis: SA will help reduce the risk of decisions taken by PGC as it will help PGC build on their core competencies and strengths and highlight weaknesses that need to be resolved.
28. Analysis: SA takes time to do in terms of management focus, reducing time available for other tasks.
29. Analysis: Porter's Five Forces: Power of buyers, suppliers, threat of substitutes, barriers to entry and competitive rivalry helps PGC make decisions about markets to enter and reduces risk by considering factors that affect success.
30. Analysis: Relation of strategic analysis to other areas of strategic management.
31. Analysis: Analysis of role of SC techniques in making the decision
32. Evaluation: Elements that the evaluation/judgement might depend on such as: PEST needs to be reviewed regularly.
33. Evaluation: Elements that the evaluation/judgement might depend on such as: PGC operates in a dynamic environment so analysis may quickly become outdated.
34. Evaluation: Elements that the evaluation/judgement might depend on such as: Subjective nature of PEST analysis.
35. Evaluation: Elements that the evaluation/judgement might depend on such as: An assessment of the importance of timing and a timescale in carrying out analysis.
36. Evaluation: Elements that the evaluation/judgement might depend on such as: Subjective interpretation of the models one manager's opinion of PEST may be very different to another's.
37. Evaluation: Elements that the evaluation/judgement might depend on such as: Internal factors will influence likelihood of success e.g. resistance to change, availability of finance, flexibility of employees.
38. Evaluation: Elements that the evaluation/judgement might depend on such as: Strategic analysis is only as good as the information gathering process and ability of the analyst allow.
39. Evaluation: Elements that the evaluation/judgement might depend on such as: Good analysis is not a guarantee of successful decision making.
40. Evaluation: Elements that the evaluation/judgement might depend on such as: Essential to have objective(s) for successful use of techniques.
41. Evaluation: Elements that the evaluation/judgement might depend on such as: Critical comments on the techniques.
42. Evaluation: Evaluation of other factors that influence options such as: Comments that PEST on its own is not enough to fully support a decision.
43. Evaluation: Evaluation of other factors that influence options such as: Attitude of directors
44. Evaluation: Evaluation of other factors that influence options such as: Attitude to risk
45. Evaluation: Evaluation of other factors that influence options such as: Need for SC techniques in making the decision
46. Evaluation: Justification of most useful technique(s) with supporting argument.
47. Evaluation: Ranking the usefulness of the techniques in relation to PGC's plans.
48. Evaluation: Weighing up importance of other stages in strategic management especially objectives and choice techniques in relation to strategic analysis.
49. Evaluation: Successful analysis requires to be set in the framework of strategic management/planning.