pest factors affecting ib
TRANSCRIPT
![Page 1: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/1.jpg)
PEST Factors Affecting International Business
![Page 2: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/2.jpg)
Presented by:
Yogesh Godhwani 33
Balaji Gopal 08
Namita Kulkarni 47
Prashant Mehta
Gaurav Bhatia 16
Lakshmi Suresh 51
![Page 3: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/3.jpg)
Agenda
What is PEST analysis
Importance In International Business
Political and Legal environment
Economic environment
Social Environment environment
Technological environment
Case Study McDonald's
Conclusion
Bibliography
![Page 4: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/4.jpg)
PEST Analysis
Acronym for– Political– Economical– Social– Technological factors
Concerned with External Macro Environment
![Page 5: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/5.jpg)
Answers These Questions
• How easy will it be to move from purely domestic to international International business?
• Would the business benefit from foreign investment?• Which markets to enter?• What is the nature of competition?• Product/service range to introduce?• What are the cultural norms for doing business? • What kind of international and domestic laws will your business
encounter?• What is the nature of politics in the market.?• What is the level of new industrial growth?
![Page 6: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/6.jpg)
Importance in International Business
Framework for reviewing a NEW ENVIRONMENT
Helps to • break free of unconscious assumptions • effectively adapt to the realities of the new environment
Thus aiding effective• business and strategic planning, • marketing planning, • business and product development etc.
![Page 7: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/7.jpg)
Political & LegalEnvironment
![Page 8: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/8.jpg)
Political Factors Affecting International Business
• Political Systems: Party Systems • Democracy • High in Political rights & civic liberties
Eg: India, U.S.A, Australia etc• Totalitarianism
Eg: China, Vietnam, North Korea etc• Politics & Economics Mix
Eg: Thomson drops bid for LTV Division
![Page 9: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/9.jpg)
Political Risks & Instability
• Corruption• Social Unrest
Eg: Hindu-Muslim Conflict in India• Policies of host Government
Eg: Coca-Cola shown the door in 1977.
Eg: Instability in Pakistan poses risks• Operation Risk
![Page 10: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/10.jpg)
Minimization of Risks
• Stimulation of the local Economy
Eg: IBM in FRANCE• Employment of Nationals
Eg: Dell & IBM in India & Gulf.• Sharing ownership
Eg: Ford reduces share to 40% in Africa.• Being Civic Minded:• Eg: Heinz funds nutrition studies in China.
![Page 11: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/11.jpg)
Legal Factors Affecting International Business
• Common Law: Eg U.S.A, U.K etc• Civil Law: Eg France, Germany etc• Theocratic Law: Eg Muslim Countries• Product Safety & Liability• Labour Laws:• Eg: Nike in Vietnam
( Failure of implementation of labour laws )
![Page 12: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/12.jpg)
Economic Environment
![Page 13: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/13.jpg)
Economic Factors Affecting International Business
Home Country
Host Country
Global Level
![Page 14: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/14.jpg)
Home Country
Conducive• Economic policies• Trade and commercial policies• Promotional and regulatory measure
![Page 15: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/15.jpg)
Host Country
Major Criteria• Market Size• GDP• Industrialisation• Purchasing Power• Foreign Exchange• Income Levels• Economic Diversity
![Page 16: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/16.jpg)
Global Level
• International Organisations• Trade Agreements Between Countries
NAFTA ASEANEU
![Page 17: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/17.jpg)
Social Environment
![Page 18: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/18.jpg)
Social Factors Affecting International Business
Social factors include the demographic and cultural aspects of international business.•Demographics
•Class structure
•Education
•Culture
![Page 19: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/19.jpg)
• Emphasis on safety
• Entrepreneurial spirit
• Attitude
• Leisure interests
![Page 20: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/20.jpg)
Example: Motor Car Manufacturers
SOCIAL FACTORS• Brand image • Health aspect• Energy consumption
![Page 21: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/21.jpg)
Technological Environment
![Page 22: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/22.jpg)
Technological Factors Affecting International Business
• Recent technological developments
• Technology impact on product offering
• Impact on cost structure
• Impact on value chain
![Page 23: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/23.jpg)
Technological Factors Affect…
• Demand
• Production process
Evaluating Technological changes to increase growth and to maintain survival
![Page 24: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/24.jpg)
Drambuie Liquor Company
• Better Manufacturing Facility• Update to better Technology• Command The market based on Technological
planning• Hence Comes out with better product at cheaper cost
![Page 25: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/25.jpg)
Case Study: PEST Analysis of McDonalds.
![Page 26: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/26.jpg)
Company Background
• It has been synonymous to what is widely-accepted the fast-food concept.
• Operates over 31000 stores all over the world • One of the first to perfect the concept of fast service
in the food industry in its early days of operations in 1955.
![Page 27: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/27.jpg)
Political factors
• government control on marketing of fast food restaurant• control on license and Business Regulations for franchising.
Economic Factors
• Dealing with international sourcing for its material• Compliance with the tax structures that vary with the
country.• Economic condition and growth of the country is an
important indicator of demand.
![Page 28: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/28.jpg)
• For different countries cultural sensitivity should be upheld.
For example• in India people (Hindu) do not take beef, Muslim countries do
not take pork, • Finnish like fish type of food menu, • Chinese like to associate food with something good (for
example prosperity)
Social/ Cultural Factors
Technological FactorsIntegrated technology in the management of its inventory system
and value chain.
![Page 29: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/29.jpg)
![Page 30: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/30.jpg)
Bibliography
• International Business – R. Chandran.• Ebesco.com, IB by Subbarao• http://ivythesis.typepad.com/term_paper_topics/2010/10/pestl
e-analysis-to-explain-companys-international-strategy-for-mcdonalds-.html
• http://www.marketingteacher.com/lesson-store/lesson-international-marketing-environment.html
• http://ezinearticles.com/?Key-Principles-of-PEST-Analysis&id=5791508
• http://ezinearticles.com/?Key-Principles-of-PEST-Analysis&id=5791508
![Page 31: PEST Factors Affecting IB](https://reader033.vdocument.in/reader033/viewer/2022061304/54fda38b4a7959422b8b46a8/html5/thumbnails/31.jpg)