A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.
- Understanding a DESTEP analysis
- The six categories of the DESTEP analysis
- Advantages and disadvantages of the DESTEP analysis
- Key takeaways:
- Other connected business strategy frameworks
Understanding a DESTEP analysis
Essentially, the DESTEP analysis is a simple framework for breaking down the complexities of strategic planning. Identifying key market factors promote constructive internal discussion and broadly speaking, serves as a decision-making tool.
The six categories of the DESTEP analysis
Here, there are six categories:
- Demographic – comprising statistical information about people such as population size, density, age, gender, or occupation. Demographic information is important because people provide the impetus for a business existing and are a driving force in market development. Changing demographics means changing markets, which in turn influences marketing strategy. Typically, change is driven by population growth, age structure, family structure, and geographic population shifts.
- Economic – or factors affecting consumer purchasing power or behavior. These include gross domestic product (GDP), import duty rate, sales tax, inflation, unemployment, and disposable personal income.
- Socio-cultural – these factors describe the behaviors, values, or preferences of different societies and cultures. One example of business failing to understand this factor was Pringles, who released a new flavour of smoky bacon potato chips in a campaign wishing Muslims a blessed Ramadan.
- Technological – a significant influence on business operations because new technologies constantly replaced outdated technologies. While many businesses benefitted from the wireless communication revolution, many others were left behind.
- Ecological – concerns around the exploitation of the environment and natural resources are also a crucial factor. Sustainability and pollution reduction are two such factors every business needs to consider.
- Political – these are external political factors related to laws, governmental agencies, minority groups, or movements. Understanding these factors is seen as particularly important for a business entering a foreign country.
Advantages and disadvantages of the DESTEP analysis
The DESTEP analysis is a simple and holistic account of macroeconomic factors and can be completed by an individual or a group.
It also stimulates discussion about sometimes overlooked external factors and maintains focus on adapting strategy to the target demographic.
However, it does have some disadvantages:
- It does not provide a way to weigh the importance of the various categories.
- It combines the political and legal aspects into one category, which some businesses may find restrictive.
- As extensive as the analysis is, it does need to be complemented by an analysis of internal and competitive factors.
- Lastly, the DESTEP analysis requires a significant investment of time and resources to collate the necessary information. By the time the analysis is complete, the prevailing market conditions may have shifted.
- The DESTEP analysis is a variation of the PEST analysis. It helps businesses understand their external environment and the issues which may impact them.
- The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.
- The DESTEP analysis is a simple and detailed means of stimulating discussion around external threats. However, some businesses may find the lack of a scoring system and significant upfront investment restrictive.
Other connected business strategy frameworks
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