Advise Sarah on whether PEST analysis is the most useful approach for SH in developing a new business strategy.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [AO1] Knowledge about PEST analysis (Political, Economic, Social, Technological factors and their focus on the macro environment).
2. [AO1] Knowledge about other strategic analysis approaches (e.g., SWOT, Porter's Five Forces, Ansoff matrix, Blue Ocean strategy, Scenario planning, Core competence framework, Force field analysis, Decision trees).
3. [AO1] Knowledge of the meaning and purpose of a business strategy and strategic management (analysis, choice, implementation).
4. [AO2] Application of PEST analysis insights from Appendix 4 to SH's context (e.g., government free trade, economic recovery/inflation, price-sensitive consumers, AI, new production techniques).
5. [AO2] Application of SH's current situation (declining revenue, market share reduction, new competitor NHT, need for new strategy to return to profitability).
6. [AO3] Analysis of the usefulness of PEST analysis for SH, considering how external factors impact business strategy and choices (e.g., new competitors from free trade, changing marketing strategy needs in recession, impact of inflation on profit margins).
7. [AO3] Analysis of social factors: increased online shopping's impact on SH's retail store sales, importance of technology vs. price sensitivity in current economic climate, impact of young immigrants on market.
8. [AO3] Analysis of technological factors: use of AI in market research, potential for cost reduction through new production techniques and ROI.
9. [AO3] Analysis of arguments against PEST analysis for SH: its simplicity, being a snapshot in time, reliance on external consultant data, not considering new external influences.
10. [AO3] Analysis comparing PEST with other approaches (e.g., SWOT for internal factors, Porter's for industry competition, Ansoff for growth strategies).
11. [AO4] Judgement on the overall usefulness of PEST analysis for SH in developing a new business strategy, considering its strengths and weaknesses.
12. [AO4] Evaluation considering the validity of data, SH's market position (staying in same market or diversifying), and the value of using PEST in tandem with other approaches.
13. [AO4] Weighing up the arguments for and against PEST, or for using alternative approaches, to advise Sarah effectively.