Micro-lending is now a fast growing global industry
Though mostly of the pioneering Microfinance Institutions started out with visions and missions — usually coming from the emotions of their founders — of helping the poor through simple provisions of small financial services or by just giving financial access to the marginalized sectors of our society, micro-lending has become a fast growing global industry.
And, if you want to involve yourself with it or if you want to improve your microfinancing businesses, you have to grasp some technical aspects of management and marketing.
My previous three posts, microfinance trends in the Philippines, Simple Area Selection Processes and Market Segmentation, dealt with marketing, i.e., positioning your company’s future, mapping out possible market place and having data for market analysis. These are simple but equally radical and important activities that will secure your future in micro-lending.
I know, you are now creating your products as I urged you to do in my Market Segmentation article. That will be good but do not package them yet as finished products. Do first the PEST Analysis before letting your products conquer the market.
What is PEST Analysis and Its Importance to Microfinance?
PEST Analysis is a simple, useful and widely-used tool that helps you understand the “Bigger Picture” of your Political, Economic, Socio-Cultural and Technological environment. Business leaders used it worldwide to build their vision of the future. So, don’t be left out.
As more organizations engage in micro-credit, the harder the competition for the market. PEST Analysis could help you:
- Position your MFI to Competitive Marketplace
- Create your Brand that will propel your products and services ahead
- Know Potential Investment Areas
- Have Strategic Options such as entering a new market or launching New MFI Products or Services
- Build Strategic Plans of Actions
While PEST Analysis is a simple but broad tool and encompasses broad spectrum like Political, Economic, Socio-Cultural and Technological, it is not a complete tool. You have to do SWOT Analysis and Market Analysis or Competitors Analysis, if you want to go into specifics.
But, SWOT Analysis could be done later during your Review Stage.
PEST Analysis is important for these reasons:
- By making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it;
- PEST Analysis helps you avoid taking action that is doomed to failure from the beginning, for reasons beyond your control; and
- PEST helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment.
That’s it for now. My next post will be: How To Do PEST Analysis in Microfinance?