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Classification Systems and Pest Analsyis

Step One: The first step in an external analysis is to determine to which industry your target business is classified. Usually this is done through North American Industry Classification System, or NAICS code. Find a website or library reference that would enable you to determine the NAICS code of any business.

Step Two: Research web and library sources that would give you the kinds of data you would need to conduct a Porter 5 Forces analysis. We are not looking for sites that describe the 5 Forces, but for sites that would have data that you could use to analyze the degree of competition in an industry, or the ease of substitution, for instance. You have undoubtedly run into such websites and publications before in your core courses. Typically, they are government sources providing statistical data, industry or trade magazines or journals, general business publications, financial websites, websites for trade associations, etc. This is a two step process: First figure out what kinds of information you would need to evaluate each of Porter's forces, (see the background materials) and then find a source that will give you that information. Find a minimum of 2 different sources for each of Porter's Forces.

(Hint: Some people find it easier to conceptualize if they have a particular company in mind. This is OK, because the sources you find for a given company will probably have information for other companies as well. Just be sure you keep the analysis focused on factors that will affect the entire industry - not just a specific company.)

Step Three: Research web and library sources that would give you data to support a PEST analysis. Find at least 2 different sources for each PEST variable.

Step Four: List your resources from steps 1-3 above. For each source, provide a title and a URL, if applicable. Write a short paragraph explaining what information is available, how it would be useful in an external analysis, and critiquing the source (for example, What are the limitations of the source? Is one better than the other? Why?)

Solution Summary

The solution provides explanations to questions regarding the benefit of both the North American Industry Classification System and PEST analysis, citing examples of both and their practical application

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