It has come around as we knew it would, so what does 2021 have in store for us? For this we should turn to one of our favourite frameworks - PEST analysis.
Political
Joe Biden is in the White House, or at least he will be very soon. Inevitably there will be political changes in the largest economy in the world. It is unlikely that Biden’s changes will cause shockwaves; rather they will move the US supertanker quite slowly. Every US president knows the importance of stoking the economy. He will do his very best to maintain high levels of employment and growth. This won’t be easy given the massive debt and the decimation in the wake of Covid-19. Taxes will increase and it is hard to see how the ballooning stock market will continue as it has done for the last decade.
Economics
Trying to predict what will happen to global economics is like looking through a glass darkly. Economic trends are always patchy. The fossil fuel energy market may decline while solar and wind power grow in importance. Shops on the High Street may be boarded up while more and more delivery vans roam our roads. Mature economies in the West may slow down while emerging economies move forward. Economics is going to be one of the most important pulses to watch in the next 12 months and one of the most difficult to predict. We will have to be vigilant and quick on our feet. It will be wise to hope for good times but be prepared for the worst.
Social
The Baby Boomers and the Silent Generation are still with us in considerable numbers. They account for around 30% of the population in developing countries. These people have money! We shouldn't forget them even though they are a bit stuck in their ways and declining in number. They appreciate having their hands held (metaphorically) when being served by suppliers. In their wake are a group of people with different attitudes and abilities. We need to understand how to serve the very significant populations made up of Generation X, Millennials and Generation Z.
Technology
We have witnessed the speed with which technology can change and help us. New vaccines for Covid-19 were developed in less than 12 months. The pandemic has given digital services a big lift. The shift to buying online has continued apace. It has affected all businesses, none more so than retail. The technological trends we can expect over the next few years will be a continuation of digital marketing as well as eye-opening opportunities for artificial intelligence.
The term PEST arose following an article written by Francis Aguilar, a professor at Harvard Business School who, in 1967, wrote a book entitled Scanning The Business Environment. In it he referred to the economic, technical, political and social factors that affect businesses and these were accorded the acronym ETPS, later changed to the more memorable PEST. Over the years a couple of additional and important forces have been added (L for legal and E for environmental). We now have PESTLE (or PESTEL if you prefer).
Legal
The biggest legal issue we Brits need to keep our eyes on in 2021 will be the implications of Brexit. Thank goodness we have a deal with the EU though by all accounts we have added a significant layer of bureaucracy with the new forms we will have to fill in for anything entering or leaving the country. Get those wrong and our trucks could be held up in long queues at the ferry terminals. And what about the service side of our economy? Finance, legal and professional services account for almost half our exports and they aren’t accounted for in the 1246 page deal.
Sustainability
The world has woken up with a start (thank goodness) to the fragile nature of our planet. We are reminded daily by lobby groups, protests, and wildlife documentaries about global warming and unnecessary waste. Our customers in the future will not be happy unless we can demonstrate that we have made serious efforts to make our offer as an environmentally friendly as possible.
We have been fortunate in having a good run in our economy over the last decade – almost too good to be true. Few business cycles last more than 10 years and this one has been with us for around 12 years. Change is inevitable and we must be ready for it. Whatever happens, we must be prepared to move quickly, innovate, and run harder.
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