PESTLE (Political, Economic, Social, Technological, Legal, & Environmental) Analysis

❖ KEY TERM: To gain the “big” picture view (microenvironment).

❖ Francis Aguilar & Arnold Brown – proponents of the PESTLE Analysis.
▪ Political:
- Government Analysis
- Bureaucracy
- Corruption
- Internal Political Issues
- Wars
- Terrorism
▪ Economical:
- Inflation
- Unemployment
- Industry Growth
- Import &Export Ratios
▪ Social:
- Demographics
- Culture
- Domestic Market
- Consumers’ PreferenceDai
- Advertising & Publicity
▪ Technological:
- Machineries and Equipment
- Skills
▪ Legal:
- Employment Law
- Consumer Protection
- Tax Regulations
- Money laundering Regulations
- Health and Safety Regulations
▪ Environmental:
- Natural Calamities

MoSCoW Method - It is a prioritize technique that is used in management, business analysis,

project management, and software development to reach a common understanding with
stakeholders on the importance they place on the delivery of each requirement. It is also
known as MoSCoW prioritization or MoSCoW analysis.

❖ KEY TERM: Gives prioritization towards a new product.

❖ Dai Clegg - He was the one who developed prioritisation method. He first used
extensively with the agile project delivery framework Dynamic Systems Development
Method or DSDM.
 • DSDM - is an agile software development methodology. It is an iterative,
incremental approach that is largely based on the Rapid Application
Development (RAD ) methodology.
➢ MUST HAVE: requirements labeled as Must have are critical to the current delivery
timebox in order for it to be a success. If even one Must have requirement is not
included, the project delivery should be considered a failure.
➢ SHOULD HAVE: Requirements labeled as Should have are important but not necessary
for delivery in the current delivery timebox.
➢ COULD HAVE: requirements labeled as Could have are desirable but not necessary,
and could improve user experience or customer satisfaction for little development
cost. These will typically be included if time and resources permit.
➢ WON’T HAVE: requirements labeled as Won't have have been agreed by stakeholders
as the least-critical, lowest-payback items, or not appropriate at that time. As a result,
Won't have requirements are not planned into the schedule for the next delivery
timebox. Won't have requirements are either dropped or reconsidered for inclusion in
a later timebox.

VPEC-T (Values, Policies, Events, Content, Trust)

❖ KEY TERM: Revolves on the analyzation of expectations from different views.

❖ Nigel Green & Carl Bate – proponents of VPEC-T.
➢ Values – represents what the company, the users or everyone involved that is looking
to gain from an information system.
o Example: faster turnaround of orders, more reliable handling of complaints,
reduced costs, and the full range of benefits normally claimed for informations
systems.
➢ Policies – controls that limit how the information is handled.
o Example: limits on credit allowance, limits on value of order based on given
criteria, constraints on the use of personal information, ‘know the customer’
regulations for financial institutions, export controls, and weight limits for
packages.
➢ Events – thins that in a business that trigger a chain of actions that lead to the business
serving its customers, collecting its income, managing its staff and generally meeting
its obligations.
o Example: the receipt of the purchase order, a phone call or email querying a
delivery, a customer signing off on completion of the receipt of a service, or the
oral or written authorization of a transaction.
➢ Content – comprise information in any form of message that flows around the business.
The meaningful portion of documents, conversations, messages, etc.
o Example: phone calls to check a credit history, emails about usual delivery
patterns and the content of stores requisitions and purchase orders.
➢ Trust – something that can be issued almost anywhere.
 o Example: the discovery that a purchasing officer maintained parallel records in
a spreadsheet.
❖ Uses of VPEC-T:
✓ preparation of the staff-appraisal interviews.
✓ testing the likely success of options to change a business and overturning bad
decisions.
✓ assessing and planning next steps.
✓ resolution of structural problems in a company with several groups performing
similar business functions but with different policies on charging for their services.

Information System – an organized system for the collection, organization, storage, and
communication of information.

*CORPORATIONS use information system to process financial accounts, to manage their

human resources, and to reach their potential customers with online promotions.*

Many major companies are built entirely around information systems. These include eBay, a
largely auction marketplace; Amazon, an expanding electronic mall and provider of cloud
computing services, and Google, a search engine company that derives most of its revenue
from keyword advertising on Internet searches.

SCRS (Strategy, Current state, Requirements, & Solution) - encourages analysts to present
practical and feasible business solutions that flow from the current strategy and are in tune
with the business’ overarching vision and goals. One of the best analytical tools for business
analysis.

❖ KEY TERM: For long term objectives; analysis should flow from high level business
strategy to the solution.
➢ Strategy
- involves considering the business vision, objectives, policies, and plans.
- the goal here is to develop a sort of blueprint which can guide future initiatives and
decisions, aligning them in a single direction and methodically allocating resources
where necessary.
- this will ensure that proposed solutions are in line with business strategy.
- define the strategy of the business, that is, document the goals/objectives of the
business and evaluate any existing roadmaps for achieving same.
➢ Current state
- often vastly different from their desired states.
- It is what the current situation is in terms of competition, stakeholders, systems,
processes, culture, environment and all other elements that have an impact on the
business and its ability to achieve its objectives.
- It’s important to consider all key aspects of the business (people, process,
technology, environment) and any other factors that play a role in defining its
current state.
 ➢ Requirements
- business analysis define what is need taking into consideration business
requirements, technical requirements, and functional requirements.
- it Document the key requirements and review with stakeholders to get their input
and buy-in.
➢ Solution
- made to the business and implemented, with the objective of fulfilling the
requirements already identified.
- implement the solution which is in line with the strategy of the business, has taken
the current state of the business into consideration and fulfills the requirements
identified.

CATWOE (Customer, Actors, Transformation, World view, Owner, Environmental constraints)

- simple checklist for thinking.

- defined by Peter Checkland as a part of his Soft Systems Methodology (SSM).
- it is one of the generic techniques that Business Analyst use to identify the what the
business is trying to achieve, what are the problem areas and how is the solution
going to affect the business and people involved in it.
❖ Peter Checkland – proponent of CATWOE.
❖ KEY TERM: Customers are at the highest level business process.
➢ Clients
- stakeholders who are the users of the system or process.
- who’ll benefit of suffer due to the change in the system/process.
- The first step in a CATWOE analysis is to identifying such customers and
understanding how the process or system affects them.
➢ Actors
- These are the people involved in the implementation of the changes in the
system/changes.
➢ Transformation
- These are the changes that the system or process brings about.
- A CATWOE analysis requires listing the inputs and the nature of change inputs
undergo to become outputs.
➢ World view
- Weltanschauung, also known as “Worldview” is the big picture and the wider
impact of the transformed system/process.
- The system/process is analyzed to come up with the positive and negative impact
on the overall business.
- This is the most crucial step in CATWOE analysis as different stake holders have
different approaches to the same issue.
- The primary difference in the CATWOE analysis prepared by each stakeholder lies in
Weltanschauung, and the purpose of a CATWOE analysis is to make explicit such
different worldviews.
 ➢ Owner
- These are the Decision makers who have the authority to make the changes, stop
the project, or decide on whether to go ahead with the change.
➢ Environmental constraints
- These are the external constraints and limitation affecting the success of the
solution.
- These can be ethical limits, Regulations, financial constraints, resource limitations,
limitations of project scope and limits set by terms of reference and others.

STEER ANALYSIS (Social, Technological, Economical, Ecological, Regulatory)

-In a Risk Assessment, a hermeneutic used for investigating the impact of a venture
or investment.
- These are the types of issues that must be addressed before one decides whether
or not to make an investment
❖ KEY TERM: Ecological diversity (considerations towards nature).

VMOST (Vision, Mission, Objective, Strategy, Tactics)

- Guarantees consistency; highly structured yet simple and effective method to set
goals for team members at every level of organization.
❖ Rakesh Sondhi – proponent of VMOST.
❖ KEY TERM: Consistency and alignment; internal environmental analysis.
➢ Vision
- For long term character of the organization.
➢ Mission
- Changes to help; purpose.
➢ Objective
- Check points whether the vision and mission is accomplished.
➢ Strategy
- Result of comprehensive and complicated ideas.
➢ Tactics
- Actions needed to be completed.

HEPTALYSIS

-refers to the method of analysing seven factors that should be considered in the
early stage of starting a business. It is mostly used in analysing of venture capital
funding for a novel idea or product where recognizing the risk is an important
factor. In this technique one reviews a business planning with respect to the current
knowledge of the potential market and also the resources that are needed. The
following factors are the subjects of the early stage analysis in this method.
❖ KEY TERM: Wise investment; in depth analysis.
Market Opportunity. Business in one word is best explained by the name of a product, service
or solution. If there is no market, even the best idea and product has no economical value.
Here we list a few questions that must be answered about the potential market for a
product.

▪ Who are the potential customers for this product?

▪ What is the benefit of it for the customers?
▪ Where and how it can be used?
▪ What is our advantage over the competitors who produce the same product?
▪ Is there a sustainable market for the product?
▪ When is the best time to introduce the product to the market?

Product/Solution.

▪ What are we going to bring to market? service, product or a combination of them?

▪ Are there any follow-up products?
▪ Are the follow-up products in the scope of our activity?

Execution Plan. Here the main question is “how to do it?”. Making a good and detailed plan
for each activity is a main factor in running a business smoothly and with less trouble. These
items must be covered in each planning

▪ Marketing and Promotion

▪ Sales and Distribution
▪ Production and Quality
▪ Compensation
▪ Growth

Each of those items should be studied with respect to the available financial and human
resources. Also to monitor their progress one must define proper milestones and
measurements.

Financial Engine. From the first day of running a business there are expenses that consume
constantly the resources, such as salaries, lease, maintenance fees and marketing
expenses. They may be paid by internal resources like current cash flow or from external
resources. If there is a bright horizon in front of the business then the required funding may be
taken from an external source, say loan. As another option we have to mention factoring

Human Capital. Human are a very important source for a business. Finding a good team and
keeping them together to achieve the business goal is very vital. Also having a
knowledgeable group of employees is a very important factor if the growth and
sustainability of a company. With respect to the level of the activity and the technology that
is uses, employee needs constant training. Also for changing the roles and promotion to a
higher rank need not only experience but also knowledge. Accounts receivable factoring is
an alternative solution for managing cash flow problem in a business.
Potential Return. Having a realistic idea of the market situation is the first step in forecasting
the potential revenue. There are some question that must be answered for a better
understanding of the expected revenue of a business.

▪ What is the expected share of market?

▪ What is the pricing strategy?
▪ Is the price affordable by the majority of potential customers?
▪ How long does it take to achieve profits?

Margin of Safety. To prevent a catastrophe one need to have a realistic assessment of risks
that involved in a business planning. There are two class of risks that involved in each
activity. The internal risks that generally result from bad planning or mismanagement. The
external risk refers to events that are out of ones control, like global recession or changes in
laws or policies. From those risks the external risk is the hardest to anticipate and mange.
Since with a deep and thorough study one can prevent the planning risk. Also the
mismanagement risk is avoidable in human resources. No matter what is the source of a risk,
it is vital for a business to have a good risk management plan for different scenarios.

Success is about the wise investments and thus the successful investment requires
impartiality, consistency as well as the superior judgment and insight. Heptalysis actually is
the modeling concept that discusses the fundamental elements of the business ventures and
suggests the ways to systemize the screening and the assessment process.

- Market opportunities: Businesses fail because there are no real opportunities to start the
business with. The analysis involves what market is currently dealing with, what is the need,
and what is being met by the current competitor. The opportunity being looked upon needs
to be attractive and should last for the longer period of time. The opportunity that is taken
should always give a decent profit and in the other hand should also be a continued source
of income.

- Product / Solution: The solution can be anything be it technology, service, product or may
be a business model. The analysis of the product / solution directly identifies whether the user
will be able to accept the company products with an ease or not. Businesses often fail
because they begin solving problems that are not a part of the market opportunity and thus
are unneeded solutions.

- Execution plan: This refers to the creation of the strong execution plan that helps in defining
the strategic framework and tactical solution to obtain significant success. Execution plan
also team members and also makes sure that they are focused on the same goal and are
moving in the right direction. The plan also needs to focus on the organizational goals as in
whole and also help to create or plan larger business goals for the organization.
- Financial Engine: This phase of the analysis deals with the internal cash flow and external
capital infusion. Allowing and understanding the cash flow allows the business analyst to
understand that the access the projected cash flows, capital investments, capital
requirements, money making strategies and allocation of the resources. It can reveal the
company's long-term strategy for making money, or uncover potential places a business is
inefficiently allocating their resources.

- Human Capital: This is the most important part of the business. No matter how much good
the idea is – it is important for the end team to understand and give it a shape which further
will decide whether the business will be a success or a failure. Apart from this, the hiring of the
right person for the right project and assigning the task to the right person is equally
important. Leaders that are being chosen by the management should be committed and
passionate in the work, however at the same time he has to maintain the harmony among
his team members.

- Potential Return: or payback is a function of the total available market, revenue model,
pricing, profit margin and time-span. The idea is to identify realistic approach as in what can
be done with money and time and then evaluate the business opportunities to make an
intelligent allocation of the human capital.

- Margin of safety: The business driven by every company is unique and there are many
factors that influence the same. It becomes very important for the analyst to understand
what can be the potential risks and what solutions should be defined to withstand these risks.
Understanding of the external as well as the internal risks is equally important. It is important
to foresee the market changes and events.