Limitations Of PEST Analysis

Newspapers
I have collected different newspapers, including trade journals and companys related articles for the
defined period. The newspapers used were Express Tribune, Daily Times, Business Recorder and The
Nation in order to gain the most up to date and authentic information about the countrys economy, its
effects on the cement industry and the economists views of the companys performance.

Magazines:
I also studied related magazines that helped me a lot to gather authentic information.

Journal Articles, eBooks, PDF:

Different online journal articles, eBooks and PDF files were also consulted in order to enhance my
knowledge and my ideas by studying different research methodologies, so that I could be able to produce a
successful project.

2. b. Limitations of Information Gathering

I had to face certain difficulties during the collection of information by using secondary sources. While using
the internet, the accuracy, completeness and authenticity of the information were most considerable things
and I had to be more careful about them. The newspapers I have collected were not in good positions,
most of the related articles were missing and I had to search the related articles from an unorganized huge
stockpile. I also had to visit in different libraries so that I could get the updated versions of reference books.

2. c. Ethical Consideration

Ethics are defined as what is right and wrong and how conduct should be judged right and wrong, it is
about. (BPP, P1)
All ACCA members, affiliates and students are bound to follow the Code and Ethics and Conduct and its
set principles. The principles are: Integrity, Objectivity, Confidentiality, Professional competence and Due
Care and Professional behaviour. These principles are defined as follows:
1. All members of ACCA should be honest and straightforward in all business and professional relationships.
2. ACCA members should not compromise their professional and business judgment through undue influence
of others and conflict of interests.
3. Members must keep all the information confidential that they acquire in their professional and business
career.
4. Members must keep their knowledge and professional information up to a certain level that ensures that all
clients and business partners get the adequate services.
5. Their behaviour must be highly professional following all the rules and regulations and must not conduct any
activity that discredits their profession.(Code of Ethics and Conduct, 2011)

The main ethical issue that I faced during the execution of my research was the academic integrity. As
most of the information which I received was through online medium, true and fair information was a point
of consideration and I need to be more careful about unintentional errors and outright falsification of the
collected information. Secondly, I also had to face the plagiarism issue, that is to copy someone others
work as my own and I had to be very careful in this regard. I used Harvard Referencing System in order to
reference the others work. Moreover, to overcome this issue I had installed plagiarism software Viper and
passed my research report through it.

2. d. Accounting and Business Tools

The following is the detail of the accounting and business tools that I have used during my research.

Ratio Analysis
Ratio Analysis is described as the interpretation of the financial health of a company by studying the
relationship of key accounting variables. Ratios are basically used to recognize that how a company has
performed over a defined period and to compare with the ratios of other organizations and the industry in
order to evaluate the performance of the company. (LSBF ACCA P3: Introduction to Ratio Analysis,
2014)

Limitation of Ratio Analysis

Despite of the advantages of ratio analysis, the following are the limitations:

The ratios can be found distorted if they are used to compare the companies that practice different
accounting policies.

If the selected two companies from two different industries are compared using ratios, the comparison
might be misleading.

Ratios are used to explain the past information about the financials of companies, however; the users are
more concerned with the current and future aspects affecting the companys performance.
(Accountingexplained, 2014)
SWOT Analysis
The most common model used for the strategic formulation and planning is SWOT Model. SWOT analysis
is used to evaluate a companys strengths, weaknesses, opportunities and threats. The SWOT techniques
valuable as it provides an in depth analysis of internal as well as external factors.

Strengths
The strengths of a business are its capabilities and resources that are considered to develop a competitive
advantage for the company over competitors in the market. Human capitals, patents, strong reputation of
the company, effective sales strategy and cost advantages are some examples of the strengths of a
business.

Weaknesses
The weaknesses are the absence of strengths in the business or the limitations and such aspects present
in the company that lead to the shortcomings against the opponents. High cost structure, high prices of
products, weak brand name, poor reputation in the market and lack of best human capital in the company
are some examples of weaknesses.

Opportunities
New opportunities can always be revealed for increasing profits and growth of the company while analysing
the external environmental analysis. Examples of opportunities are arrival of new technologies and removal
of international trade barriers etc.

Threats
External environment also contains certain aspects that could lead to adverse factors or threats to the
company. For example: shifts in the customers taste away from the companys products, advancement,
entry of new firms in the market, new regulations, changes in economic conditions and the introduction of
substitute products etc. (Quickmba, 2014)

Limitation of SWOT Analysis

The SWOT technique is limited because of the following factors:

The use of internal factors as the strengths and weaknesses and external factors as the opportunities and
threats of a company is a subjective decision.

Another limitation with the use of SWOT is that there are no understandable limits as to what is and what is
not relevant.

The determination of external factors as an opportunity or a threat is not distinguished by SWOT analysis.
The same factor can be simultaneously characterized both for opportunities and threats.

PEST Analysis
The macro environmental factors which affect the business performance of a company can be analysed by
using the acronym PEST.
Political
The political factors like the change of a government, political instability, change in tax policies,
environmental law, and foreign trade policy etc. of a country have significant impacts on the companys
performance.

Economic
The economic factors of a country like inflation rates, interest rates, economic growth and exchange rates
etc have also noteworthy influence on the organizations profits and economic growth.

Social
Social factors also affect the companys performance as they indicate the customers interest and attitudes
of the population. Some important social factors are the customers choice of the products, age distribution,
population growth rate, education and career attitudes, religious belief, cultural and social conventions and
health consciousness etc.

Technological
Technological factors like the advancements in technology, updated versions of installed programs and
new concepts have impacts on producing, marketing, distributing goods and services and communicating
with target markets. (Team FME, 2014)

Limitations of PEST analysis

The limitations of PEST Analysis are the following:
The external factors which affect the organization are usually dynamic and the change occurs at very fast
speed. It is a matter of concern that how these fast changes will affect the future or present concerns of the
company. So the PEST analysis has to be conducted regularly to make it effective.

The collection of relevant external information from reliable resources and in proper time becomes a little bit
difficult for the company. Moreover, the process also restricted by the companies because of cost
considerations. (Free-management-ebooks, 2014)