external environment ib business and management. learning outcomes prepare a pest analysis for a...
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Learning Outcomes
• Prepare a PEST analysis for a given situation and use it to analyse the impact of the external environment on a firm
• Evaluate the Impact on a firm’s objectives and strategy of a change in any of the PEST factors
• Explain how external opportunities and threats can impact on business decision-making and SWOT Analysis
Business Activity
The organisation
MarketingFinance
People Production
External Factors
Inputs/ resources
Land Labour Capital Enterprise
Outputs
Goods and services
External Factors
Achieving business objectives….
• In the pursuit of achieving their aims and objectives businesses face challenges and opportunities from outside the organisation…… We can call these PEST Factors (Or PESTLE, LEPEST)
PEST Analysis
• A PEST analysis of an audit of the external environment of a firm.
• External influences are outside of the control of the firm
• It involves trying to identify any potential Opportunities or Threats that the firm may be presented with
Why do a PEST Analysis?
• ‘Forewarned is forearmed’ What is the meaning of this saying?
• PEST may be done at any time but is particularly useful at times when strategic decisions are being made
• Could be done in general or for a specific industry
Political• How and to what degree a government
intervenes in the economy. Specifically, political factors include areas such as:
• Tax policy (Consumer and Corporate)• Employment law• Environmental law• International trade restrictions• Competition legislation• Consumer protection Law• Government attitude and procedures• Political stability
Economic
• Economic Growth• Monetary Policy (interest rates)• Government Spending• Unemployment• Exchange rates • Inflation• Trade Cycle• Consumer Confidence
Social
• Income Distribution• Demographics (Age, Gender, Family Size,
Occupations)• Social Mobility• Lifestyle• Attitudes to Work and Leisure• Fashions and Fads• Attitude to work• Living conditions
Technological
• Government spending on research• R&D activity• Speed of technology transfer• New discoveries• Rates of obsolescence• Energy use and costs• New materials• Developments and availability of ICT• Internet
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