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SECTION D. PEST Analysis. Microenvironment. Factors or elements in an organization's immediate area of operations that affect its performance and decision making freedom. These factors include competitors, customers, distribution channels, suppliers, and the general public.

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PEST Analysis

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Factors or elements in an organization's immediate area of operations that affect its performance and decision making freedom. These factors include competitors, customers, distribution channels, suppliers, and the general public.

Microenvironment is what the company does in relation to it’s environment.

macro environment
Macro environment

Factors that influence a company's or product'sdevelopment but that are outside of the company's control. For example, the macro environment could include competitors, changes in interest rates, changes in cultural tastes, or governmentregulations.

Macro environment is what is out of the control of your company.

  • Political: local, national and international political developments – how will they affect the organisation and in what way/s?
  • Economic: what are the main economic issues – both nationally and internationally – that might affect the organisation?
  • Social: what are the developing social trends that may impact on how the organisation operates and what will they mean for future planning?
  • Technological: changing technology can impact on competitive advantage very quickly!
  • Ethical Constraints (Product/Promotion)
    • Is your promotion suitable – will it offend anyone, certain colours mean different things in different countries
    • Is the name of your product translatable?
  • Environment (Promotion/Packaging)
    • The number of policies concerning the environment has risen
    • Has your product been changed to be environmentally friendly
    • Have you chosen to use more recyclable material in your product/packaging?
    • Have your thought about the recyclability of your product?
    • How energy efficient is your product?
  • Grants/Loans for certain products
    • Car Scrap Scheme
  • War/Conflicts
political continued
Political continued...
  • Legal Constraints on advertising
    • e.g. UK tobacco advertising is banned
    • e.g. Food – have to have nutritional content on packaging, also health campaigners are calling for restrictions to be placed on fast food adverts as they are leading to obesity.
  • Are they any guidelines that have been set by the government surrounding your product?
    • E.g. Water/Electric Companies cannot raise prices beyond limits imposed by the government.
    • Product Quality
    • Health Standards
  • UK Credit Crunch/ Recession (Product/Price)
  • World Recession
  • Unemployment is rising (Product/Price)
  • Rise in low cost products (Price)
  • Economic Recession
  • Rise in food prices
  • Cheap advertising at the moment
  • Interest rates are low = less saving, more spending?
  • Strength of the £
  • Unemployment rates are high = less disposable income (Price)
  • Job Cuts/Pay freezes/Redundancies (Price)
  • VAT has risen form17.5% to 20% - luxury items cost more money! (Price)
to get started remember
To get started remember:
  • We’re in a recession
  • Interest rates are low
    • Bank of England set the interest rates
    • These rates determine how much interest can be earned on savings
    • Interest rates are low, therefore there is no point in having savings
    • This is a deliberate process to encourage people to spend their money
    • People spend their money, businesses thrive and we come out of the recession – negative feedback process
  • Ageing Population (Product)
  • Child Care Cuts – Rise in stay at home mums (Product/Price)
  • Addicted to smart phones (Product/Promotion)
  • Reality TV (Promotion)
  • Social Gaming (Product/Promotion)
  • Rise in levels of Obesity (Product)
  • Rise in on-line shopping (Place)
  • Celebrities in advertising – New M&S advert with X Factor Contestants
  • Competing technology developments (Product)
  • Consumer buying mechanisms/technology (Place)
  • Global communications (Promotion)
  • Technology Legislation
  • Technology access, licensing, patents
  • Intellectual property issues
  • R&D Costs
  • This is high level information for top marks
  • Don’t need to much detail but need to show you have considered the PEST aspects and realise their importance.
examples of pest
Examples of PEST
  • Growth of China and India as manufacturing centres
  • Concern over treatment of workers and the environment in less developed countries who may be suppliers
  • The future direction of the interest rate, consumer spending, etc.
  • The changing age structure of the population
  • The popularity of ‘fads’ like the Atkins Diet
  • The move towards greater political regulation of business
  • The effect of more bureaucracy in the labour market
  • The Guardian
  • BBC News