Is the macro-environment really a PEST?

When marketing students learn to consider the macro-environment in the development of their marketing plans and strategies, they are provided with the acronym PEST as a simple way of recalling political, economic, social and technology factors.

But this view stems from the traditional business outlook that environmental change was essentially a nuisance and that stability was preferable.

But one only needs to look at the recent financial results of Apple to see how outdated that view is in today's world. Currently, Apple generates 75% of its revenue from products it did not have five years ago. Their highly successful iPhone and iPad products were hardly on the Apple drawing board in 2004, yet today are responsible for an amazing transformation of this company.

Back in 2005, Apple looked to protect their flagship product, the iPod, from potential sales damage from the enhanced capability of smart phones. And due to their limited technical expertise in this market at that time, Apple's first foray into the smart phone market was via a joint venture with Motorola. It was only after this disappointing effort that they decided to go it alone and in mid-2007 the first iPhone was launched.

Within five years, Apple was essentially transformed into a different organization. They are now among the most profitable companies, and are also ranked as one of the valuable brands, in the world. Here is a firm that is now brimming with confidence, resources and profitability and eagerly awaiting further environmental change.

 So is the macro-environment really a PEST? A simple rearrangement of these letters transforms it into STEP. A step forward, a step upward - certainly true for Apple and perhaps a much better way to think about change and the opportunities it can provide organizations. What are your thoughts?

Geoff Fripp
Lecturer – Masters of Marketing at the University of Sydney Business School