Free Essay

Pest Analysis

In: Business and Management

Submitted By atarwp
Words 2580
Pages 11
EntErprisE survEys EntErprisE notE sEriEs

2011 EntErprisE notE no. 27

Business Environment Perceptions in Afghanistan and Pakistan
Judy S. Yang


his note compares business environment perceptions using a unique panel data set of Afghani and Pakistani firms interviewed between 2007 and 2010. Examining the evolution of business climate perceptions within the same group of firms over time allows for a clear picture of how the broad business environment is changing. Firms in both countries are operating in a time of dynamic economic, political, and social changes. However, perceptions of the severity and challenges posed by certain business environment elements differ in the two countries. The World Bank’s Enterprise Analysis Unit surveyed the same group of 319 Afghani firms in 2008 and 2010, as well as a group of 385 Pakistani firms in 2007 and 2010. Survey results show that firm perceptions of the severity and priority of certain business environment elements have changed over time, especially in the areas of electricity, political instability, and corruption.
Changes in top obstacle reporting should only be interpreted as changes in what element is currently most relevant to firms. For example, suppose a firm in Afghanistan considers electricity and corruption to be its top two concerns. In 2008, the firm selects electricity as their top obstacle because it is fundamental to daily operations. The firm acquired a generator by 2010, so electricity was no longer a top concern, and corruption was selected as the top obstacle. The important nuance is that the severity of corruption may not have improved or worsened, it was identified as the top obstacle only after their electricity supply was resolved. The degree of obstruction a business environment element poses to firm operations is captured by the major constraint statistic. Major constraints are derived from a different set of survey questions, where firms are asked to assess each business environment element individually and to report the element’s degree of severity as an obstacle to operations. A business environment element is labeled a “major constraint” if a firm reports it to be a major or severe obstacle. 2 Responses to subjective survey questions may be confounded by unobserved attitudes and individual interpretations. Subjective responses may not align with answers from objective questions. Even though a panel data set is used where identical firms are interviewed

Subjective and objective measures of the business environment
The World Bank’s Enterprise Surveys have been completed by over 120,000 firms in over 125 countries. Responses offer objective statistics and subjective opinions regarding business environment elements affecting firm operations. The first type of statistic used in this note is objective, such as the number of power outages in a month or the number of visits by tax officials. Additionally, two subjective measures are used; they are the “top obstacle” and the “major constraint.” The top obstacle statistic captures which business environment element is the most relevant obstacle faced by a firm, while the major constraint reflects the degree to which each individual element is an obstacle to daily operations. Firms identify only one business environment element out of a list of fifteen1 that “represents the biggest obstacle faced by this establishment.” The frequency an element is selected as the top obstacle in a country will accurately reflect what firms perceive to be the most relevant business environment obstacle affecting daily operations. When there are changes in top obstacle reporting, this should not be interpreted that a specific element is improving or deteriorating.

World Bank Group

over time, different managers from the same firm may respond, or individuals’ tolerance for certain business environment elements may have changed over time. Nonetheless, large changes in perception across hundreds of firms can still suggest that there are real changes in the business environment.

Perceptions of the top obstacle
Table 1 displays the percentage of firms that report a particular business environment element to be their top obstacle globally, in the South Asia region, and in Afghanistan and Pakistan. There are a number of observations that stand out. First, the percentage of firms in Pakistan reporting electricity or political instability to be the top obstacle to daily operations increased from 2007 to 2010 (from 44 percent to 65 percent in electricity, and 4 percent to 20 percent in political instability), while the percentage reporting corruption decreased (from 19 percent to 2 percent). Changes in the reporting of corruption as a top obstacle should not necessarily be interpreted as a result of improvements or declines in corruption; but possibly the result of shifting attention to the deterioration of electricity. Firms in Afghanistan have opposite changes in their perceptions, with fewer firms reporting electricity and political instability to be top obstacles, and more firms reporting corruption as their top obstacle. The percentage of firms in Afghanistan selecting crime in both survey years is also high compared to the South Asia region and global averages. About 20 percent of Afghani firms report crime as the top obstacle in both

survey years compared to only 6 percent globally. From top obstacle reporting, the business environments in Pakistan and Afghanistan appear to have different weaknesses. In Pakistan, opinions on electricity reflect a low quality of basic infrastructure. In addition, the fact that the number of Pakistani firms selecting political instability as the top obstacle increased from 4 percent to 20 percent shows that these firms are also operating in a country that is becoming more conflict ridden. Together, electricity and political instability are the top obstacles for 85 percent of the Pakistani firms surveyed in 2010, nearly twice as many as in 2007. In Afghanistan, top selections of crime, corruption, and practices of the informal sector suggest operational difficulties are primary concerns.

Electricity improving in Afghanistan
In Afghanistan from 2008 to 2010, firms have improved perceptions on the severity of electricity as an obstacle to daily operations. The percentage of firms perceiving electricity to be a major constraint fell from 66 percent in 2008 to 38 percent in 2010. The percentage of firms that ranked electricity as the top obstacle facing their business also dropped from 17 percent in 2008 to 7 percent in 2010. Over half of Afghani firms assessed electricity less severely in 2010 than in 2008. Changes in perceptions also vary across subnational regions—in the northern Mazar region for example, 60 percent of firms assessed electricity more severely in 2010 than in 2008. This is in contrast to firms in Kandahar and Kabul where almost 80 percent

Table 1

Percentage of firms reporting a business environment element to be the top obstacle
Practices of competitors in the informal sector Crime, theft and disorder Business licensing and permits Inadequately educated workforce

Tax administration

Political instability

Customs and trade regulations

Labor regulations

Access to finance

Access to land




GLOBAL3 South Asia region
Panel Firms

15 13 6 2 17 5

3 4 6 2 12 2

3 2 1 1 0 1

7 6 19 2 9 24

1 0 0 0 0 0

6 6 8 3 20 18

3 2 1 1 1 5

16 29 44 65 17 7

6 2 2 1 0 2

2 2 1 0 0 1

9 14 4 20 17 10

11 6 1 2 3 10

3 3 1 0 2 5

11 4 5 1 0 6

Pakistan 2007 Pakistan 2010 Afghanistan 2008 Afghanistan 2010
Source: Enterprise Surveys.


Tax rates


3 3 1 0 1 2

of firms perceive electricity to be less severe in 2010. By firm size, the perception of electricity as an obstacle did not vary in 2010. Improvements in perceptions were seen across all firm sizes—in contrast to Pakistan where small firms are more likely to perceive electricity to have become more severe. The incidence of power outages per month and the durations of power outages declined across all firm sizes in Afghanistan as well. Declines in the average number of power outages per month ranged from 18 to 8 power outages for large firms and 23 to 12 outages for small firms. Objective statistics on the status of electricity are also consistent with perceptions that electricity is improving. By region, some areas saw more reduction in outages than others. The average reported number of power outages country-wide dropped from 22 to 12 per month, and the average duration from 11 to 4 hours. In Jalalabad, not a single firm reported more power outages per month in 2010 than in 2008. Improvements in electricity were also reported by firms in the Kandahar and Kabul regions. However, there is still room for progress in electricity provision in the Hirat region as well as in five smaller cities that were surveyed throughout Afghanistan.

Figure 1 Change in the number of power outages 2007 to 2010, Pakistan, by region





20% Fewer outages


60% Same

80% More outages


Source: Enterprise Surveys.

Electricity is a severe obstacle in Pakistan
The perceived severity of electricity as an obstacle in Pakistan could not be more different from Afghanistan; the deterioration of electricity provisions in Pakistan is indisputable. Almost 60 percent of panel firms (224 firms out of 380) assessed electricity more severely as an obstacle in 2010 than in 2007. In the Islamabad area, almost all firms perceive electricity to be more severe in 2010 than when surveyed in 2007 (69 out of 75 firms). In addition, 100 percent of firms in Islamabad experienced power outages in 2010 compared to 66 percent in 2007. Firms in the Karachi region, however, are about evenly split between how they perceive electricity to have changed as an obstacle from 2007 to 2010. Small firms are more likely to view electricity as a major constraint to daily operations. In 2010, small and micro-sized firms reported electricity to be a major constraint at a significantly higher rate than medium or large firms (90% of small, 78% of medium, and 74% of large). The deterioration of electricity is evident from objective reporting on outages. Although the average duration of power outages decreased in Pakistan from 3 to 1.5 hours, the number of power outages per month increased substantially. Electricity supply is intermittent and inconsistent and almost all firms in Pakistan report more power outages per month in 2010

than in 2007—from 30 in 2007 to over 120 in 2010, or an average of once a day to four times a day (figure 1). The Karachi region saw the smallest increase (from 33 outages per month in 2007 to 80 in 2010), while firms in Islamabad and Lahore both saw much higher increases in the number of power outages (averaging about 150 outages a month in 2010). While these numbers appear incredibly large, the demand for power in Pakistan vastly exceeds the supply and the shortage of electrical power in Pakistan is a real and urgent problem.

Firms in Afghanistan perceive corruption to be a more severe obstacle
Among countries in the South Asia region, Afghanistan in 2010 leads in the percentage of firms that rank corruption as the top obstacle to business operations—at 26 percent. Corruption is more commonly a top obstacle for large firms (32 percent) than small firms (22 percent). By region and over time, fewer firms reported corruption to be a top obstacle in Kandahar (from 26 percent in 2008 to 12 percent in 2010), while there was an increase in Mazar (3% to 28%) and Kabul (12% to 27%) (figure 2). The Jalalabad region saw the highest change in the percent of firms reporting corruption as their top obstacle, up from 0 percent in 2008 to 32 percent in 2010. Twenty-seven percent of firms in Afghanistan reported corruption to be a severe obstacle in 2008, and 47 percent did so in 2010. Sometimes there is contradictory evidence in what firms report subjectively and what objective data illustrates. Even though more firms selected corruption as their top obstacle, over time and across most firm sizes, fewer firms reported that they were asked to give informal

gifts in 2010. Discrepancies among responses to corruption questions can be expected since it is a sensitive topic; honesty and candor to this particular topic is a noted concern.

Figure 2 Corruption in 2010 vs. 2008, Afghanistan, by region

Firms in Pakistan report corruption to be less severe
In Pakistan, perceptions on corruption are improving. From 2007 to 2010, the percent of firms that consider corruption to be a severe obstacle decreased from 27 percent to 14 percent, and the percent perceiving it to be a major obstacle decreased from 38 percent to 15 percent. Among objective measures, Pakistani firms spend more time dealing with regulations, face fewer visits from tax officials, and are less likely to be expected to give gifts in meetings with tax inspectors. Across regions, firms in Islamabad report the fewest visits by tax officials (1 visit) and managers spend the least amount of time dealing with tax officials (6 percent). In all regions of Pakistan, at least 75 percent of firms ranked corruption less severely as an obstacle to daily operations in 2010 than in 2007. The Lahore region showed the greatest decline in the percent of firms reporting that they were expected to give gifts, 35 percent in 2010 compared to 54 percent in 2007. Similar to Afghanistan, large firms in Pakistan also face more interference from regulation and corruption. In 2010, senior management from large firms spent about 15 percent of their time dealing with regulations, had about 6 visits a year from tax officials, and 66 percent of large firms were expected to give gifts in these meetings. Compared to Afghanistan, large Pakistani firms have more visits and are more likely to be asked to give gifts. Although objective measures appear more negative in Pakistan than in Afghanistan, the improvements in subjective perceptions on corruption may be due to the fact that other elements such as electricity and political instability are much more severe in comparison. In other words, tolerance for corruption may have changed in light of the emergence of more urgent issues, and corruption appears relatively less problematic.






5 smaller cities 0% 20% Less of an obstacle 40% 60% Same 80% 100%

More of an obstacle

Source: Enterprise Surveys.

1. The Pakistan 2007 survey also includes macroeconomic instability as an option for Top Obstacle. 2. In the 2010 surveys, the Very Severe Obstacle is labeled as Severe Obstacle. 3. Global surveys include all Enterprise Surveys following the global methodology and all South Asia Region surveys. In cases where a country has two global surveys, only the latest surveys are included to compute the global average. 4. South Asia Region surveys include: Sri Lanka 2004 & 2010, Nepal 2009, Bhutan 2009, India 2006 & 2010, Afghanistan 2008 & 2010, Pakistan 2007 & 2010, Bangladesh 2007 & 2010.

The Enterprise Note Series presents short research reports to encourage the exchange of ideas on business environment issues. The notes present evidence on the relationship between government policies and the ability of businesses to create wealth. The notes carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this note are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.


Similar Documents

Premium Essay

Pest Analysis

...By Mashell Chapeyama PEST analysis Pest analysis is a way in which the organization evaluates how it would fare in the environment. With PEST the organization is evaluating critical factors that affect the organization. These factors are: political, economic, socio-cultural and political. This essay is going to discuss these four factors as they affect a company named Chipinge Banana Company, which is found in Zimbabwe. It is a company that specializes in growing and selling of Bananas. These bananas are sold in the country as well as other foreign markets, particularly Asia and Middle East. Political The political system is not stable. Usually there is uncertainty in relationship to land ownership. There is a threat that some farms may be taken by government for resettlement reason. Some countries do not want to do business with Zimbabwe because it has bad human rights record. Some workers may be displayed from work due to political violence. Currently, we are going towards elections which can turn to be violent. Zimbabwe has a very high taxation system in the world. One advantage is that Zimbabwe is part of free trade agreements such as comesa. Zimbabwe has many bilateral trade agreements with many countries. This means there are some favourable conditions in that we can sell some products to countries which trade well with Zimbabwe. Economic Zimbabwe has the advantage of using many currencies, including the pound, US dollars, the yen, the kwacha, and the......

Words: 2718 - Pages: 11

Free Essay

Pest Analysis

...What is PEST Analysis? A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. However, changes in the external environment also create new opportunities and the letters sometimes are rearranged to construct the more optimistic term of STEP analysis. Many macro-environmental factors are country-specific and a PEST analysis will need to be performed for all countries of interest. The following are examples of some of the factors that might be considered in a PEST analysis. It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up from: 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors. Political Factors The political arena......

Words: 1813 - Pages: 8

Premium Essay

Pest Analysis

...PEST Analysis A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: * Political * Economic * Social * Technological The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:     Environmental Scan |           / |   \ | External Analysis |     Internal Analysis     | /                       \ |   | Macroenvironment  | Microenvironment  |   |   | |  P.E.S.T.  |   |   |   | | Political Factors Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: * tax policy * employment laws * environmental regulations * trade restrictions and tariffs * political stability Economic Factors Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macroeconomy: * economic growth * interest rates * exchange rates * inflation rate Social Factors Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Some social factors include: * health consciousness * population......

Words: 261 - Pages: 2

Free Essay

Pest Analysis of Hsbc Bank

...Political Aspects HSBC Banking has been protected by the regulations and policies formulated by different government in the countries where they are operating. The company has been able to adhere to the policies given by each government to make sure that the company will be able to conduct business operations successfully and effectively. Furthermore, the company also formulates their own protection strategies against any governmental restrictions and limitations. Economic Aspect Being the world's largest and competitive industry in terms of banking and finance, HSBC, is said to have a stable and successful economic stability. In spite of many dangers that they encounter in different parts of the world, the management of HSBC sees to it that they would be able to surpass such struggles and strives to have a better economic condition. Social Aspect HSBC is being affected by the situation of the society in which they are operating. Along with this, HSBC tries harder to make sure that each society is given equal chances to take advantage of the resources given by the organisation. The company adheres to having good reputation and relations in the society that they belong. Technological Aspect The emergence of information technology and internet affects how HSBC has been operating in the past years. The company adopts different IT/IS systems and used internet to reach their customer all over the world and to know the latest trends in the global......

Words: 253 - Pages: 2

Premium Essay

Company Slogan, Mission Statement, Pest Analysis

...Question 1 (a) i. Motorola Company ‘To be the leading product provider of innovative products that meets the expanding needs of customers around the world’ There are a lot of customers around the world, thus there’ll have different needs and wants demand by customers. Motorola would like to be the leading product provider. So, it has to be a product provider that can provide innovative products for all the customers in orders to fulfill what have been demand by the them. It can complete its tasks through the providing portfolio of technologies, solving method and services. ii. Honda Company "Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction." Its mission statement is also known as their company principle. Honda company is trying to offer products at sensible price for customers in orders to fulfill customers’ contentment. It will offer the highest quality product in sequence to maintaining the global viewpoint. If the Honda management team works accordingly to the Management Policies it will definitely lead the company to achieve their mission in future. So, we now can see that Honda Company has a lot of brunches at all around the world in order to expand their business. iii. AirAsia “Create a globally recognized ASEAN brand” AirAsia provide the cheapest ticket that can let traveler travel to any Asian destination compare to other air line company. It......

Words: 2535 - Pages: 11

Premium Essay

Walmart Pest Analysis.

...Environmental background- Every company uses a tool to check and track the environment they are operating. Walmart uses the PESTLE analysis, which sometimes reffered as PEST analysis, is a concept of marketing principles . Moreover, this comcept is used as a tool by companies to track the environment they are operating in or planning to launch new product or service. PESTLE is a mnemonic which expanded form donates to P-Political, E- Economic, S-Social, T- Technology, L-Legal, and E-Environmental. Let’s see the few below for Walmart- • Political and Legal Environment Walmart donates to the governor but at times it still faces some huge problems like- locking up the employees in store at night, fake sustainability displays, gender discrimination, labor union problems, etc. Till 1998 no steps has taken towards the political aspect and in 2006 it rises up as the No. 1 corporate political contributor. Unstable government also caused hindrance in the path of company expansion. For instance- Walmart was unable to expand in South Africa due to unstable and no proper direction government. • Economic Environment Fortune Magazine named Wal-Mart the nation's most admired company. It now has more revenue and more employees than any other U.S. company. Wal-Mart's growth over the last decade is unprecedented -- the company has gone from being a successful discount retailer to being a dominant force that no other retailer can ignore. When recession hits US, Walmart is one of......

Words: 368 - Pages: 2

Premium Essay

Pest Analysis

...PEST and PESTLE analysis is a framework used in the environmental scanningcomponent of strategic management. Under PEST and PESTLE analysis are externalfactors which are the major players in the success and failure of an organization. Politicalfactor is the government intervention in the economy. This includes tax policy, labour andenvironmental law, trade restrictions, tariffs, and political stability. Under Economic factor iseconomic growth, interest and inflation rates. These factors directly affect the cost of capitalin business operation as well as the costs in exporting goods and the supply and price of theimported goods in the economy. Social factors include cultural aspects, population growthrate, health consciousness and age distribution while... PEST Analysis The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. Political The political area has a huge influence upon the regulation of a business and the spending power of consumers and other businesses. Before I put my product on the market I need to consider issues such as: Tax policy: I will need to look at certain levels of tax. If tax is high it can affect the incomes of customers and it might...

Words: 662 - Pages: 3

Premium Essay

Company Pest Analysis

...Company PEST Analysis History and Use PEST is a type of analysis used in strategic management which takes into account Political, Economic, Social and Technological (PEST) factors. The term "PEST" was first coined by Francis Aguilar in his 1967 book, "Scanning the Business Environment." The analysis also often includes Legal and Environmental factors, thus creating a PESTEL analysis. The "EL" was added by Liam Fahey and V.K. Narayanan in their book, "Macro-environmental Analysis in Strategic Management," published in 1986.Frequently combined with Michael E. Porter's Five Forces Model and Albert Humphrey's SWOT analysis, PESTLE analysis is a useful tool for understanding market demand/decline, current business positions and potential opportunities/obstacles. The factors it analyzes should not be considered solely at the company level. Rather, these external factors must be examined at a company, national and global level. Political Factors A business could flourish under one political entity, and be run out of business by another; as in additional taxes, regulations, or bans. This can be seen as the degree by which government legislation impacts the company. Some examples include tax policy, trade restrictions and tariffs. Less obvious examples include inter-country relationships, political trends, types of government, war, terrorism, treaties and currency. Economic Factors While closely related to political factors, the economic factors analyzed by PESTEL analysis......

Words: 381 - Pages: 2

Premium Essay

Pest Analysis of Starbucks

...6-2 Final Project Milestone Three: PEST Analysis Wilhelmina Williams MBA 515 July 3, 2016 Dr. Jonathan Sturtz 6-2 Final Project Milestone Three: PEST Analysis A PEST Analysis is used to assess a business’ external factors. PEST stands for Political, Economic, Social, and Technological. The analysis will help to establish how the four elements will affect the behaviors and operation of the company in the long-term. The significance of the four sections means: • Political – Legal elements and government guidelines are evaluated for the ability that affects the trade markets and corporate environment. The relevant topics to address include tax guidelines, trade regulations, political stability, work laws, and safety regulations. • Economic – is examining the economic matters that develop an impact on the company. The factors contain interest rates, price increases, economic growth, commerce cycle the country follows, and unemployment rate and procedures. • Social – analyzing the socio-economic environment of the market through fundamentals of consumer demographics, lifestyle assertiveness, cultural limitations, and education. With this analysis, the company can identify the customer needs and determine what to bring to the market for purchasing. • Technological – whether it can negatively or positively impact the presentation of products and services to the marketplace. The issues include lifecycle of technologies, advancements, and the government spending......

Words: 663 - Pages: 3

Premium Essay

Pest Analysis Lululemon

...Assignment #1 Frequently Asked Questions Questions from this term From: Sent: Tuesday, January 26, 2010 11:28 AM To: Boyd, Colin Subject: Assignment #1 Hi, I was looking at assignment #1, in particular the SWOT analysis. Examples of it I found online were a combination of point form and paragraph. Is this alright if I formatted it like this? Thanks in advance, Answer Hi : That web site seems more like paragraph form than point form. Point form should be avoided, if possible, because it is harder to read, and the writer usually has been a bit lazy. Being forced to write flowing paragraphs makes you think more about what you want to say. Colin ---------------------- Question From: Sent: Friday, January 22, 2010 3:16 PM To: Subject: COMM 101 assignment Professor Boyd, I am unclear about "an aspect of strategy" that is required for assignment #1 in COMM 101(02).  Would you be able to clarify this in more detail so that my partner and I can success with this assignment. Thanks! Have a great weekend! Answer Hi : Strategic management is all about planning for the future. The article you choose should have some kind of example of your chosen firm having made (or thinking of making) a decision about its future. This could be stability, growth, or retrenchment. This could be changing positions regarding horizontal breadth of products, vertical integration, or......

Words: 1090 - Pages: 5

Free Essay

Pest Analysis

...PEST Analysis One way of planning your business is to undertake a PEST analysis.1 PEST analysis involves looking at the Political, Economic, Socio-cultural and Technological factors that could affect your business. Every business needs to consider a range of external forces in order to take decisions. For many people imagination is very limited and is coloured solely by their own experience and personal beliefs. This can lead to wish fulfilment or a refusal to see reality or recognise the critical changes that are happening in the world around them. It can also lead to grabbing short-term solutions that, if they do not exacerbate problems, certainly ignore the longer term. In the business world pressure is often applied to take decisions quickly, acting on judgement and instinct rather than careful analysis. There are many driving forces in the external environment that might impact on your business. These can be categorised as: • Social; • Technological; • Economic; • Environmental; and • Political. Social forces Social forces include, for example, changing demography and education, etc. The population in Western Europe is relatively static, but the age bands are changing. The number of older people, for example, is growing rapidly. Technological forces Technological forces are changing dramatically quickly. What effects will this have on your production, marketing and distribution plans? Depending on your market, technology might either raise or lower entry......

Words: 371 - Pages: 2

Premium Essay

Pest Analysis

...1.0 QUESTION 1 “PEST analysis is used by businesses around the world to devise a strategic approach to their activities”. Discuss this statement describing in detail the components of the said analysis. 1.1 INTRODUCTION Apart from a company’s internal resources there are several other factors that have a profound impact the performance of a company. The internal resources usually refers to the employees of the firm, contractors, sub-contractors, suppliers and so on whereas the external environment refers to the market, clients, stakeholders, etc. 1.2 PEST ANALYSIS According to Kotler (1998), PEST analysis is a useful strategic tool for understanding market growth on decline, business position and direction for operations. The use of PEST analysis can be seen effective for business and strategic planning, marketing planning, business and product development and research. In order to survive, be profitable and maintain their competitive advantage, organizations have to recognise and take advantages of the external environments as well as identifying and consider threats when developing strategies. One of the most commonly used analytical tools for assessing external factors in a business situation is PEST analysis. Pest is an acronym for Political, Economic, Social and Technological external factors. PEST analysis is beneficial when conducting research before beginning a new project or to help conduct market research. Also, PEST analysis helps to determine...

Words: 2639 - Pages: 11

Premium Essay

Pest Analysis Italy

...BLEND TWO COUNTRY ANALYSIS ITALY Task: You will carry out an analysis of Italy today in order to have a general idea of its current state of affairs. To do this you will visit several sites to gather the necessary information. This information should then be transferred in note-form onto the table below. You will then use these notes to give a short, informal presentation during the following class session. Procedure: You will use a well-known analytical tool: THE PEST ANALYSIS. Although this tool was originally created for the business environment, it is now used in many sectors to analyse organisations, projects and systems. STEP ONE: WHAT IS A PEST ANALYSIS 1. First you need to find out what a PEST analysis is: Go to Read quickly through the information and write short answers to the following questions: What sort of picture does a Pest analysis offer? Why is it important to take these factors into account? What are some common uses of the Pest? In what situation might you use a Pest in your own professional context? The Table below gives some of the indicators which may be relevant for each category. Can you think of any other factors to consider? Add them to the corresponding column. PEST ANALYSIS TEMPLATE Political / Legal Economic Social Technological - Government organisation / attitude - Economic growth (overall; by industry sector) -......

Words: 615 - Pages: 3

Free Essay


...Case 1 PEST analysis for Target Canada MGMT 6057 Contemporary Business Management Fanshawe College Submitted To: Albert Knab Submitted By: Jwal Dakwala Student Id: 0723855 Date: October 18, 2014 Introduction The acronym of PEST is: * Political * Economic * Social * Technological PEST includes factors related to political, economic, social and technological related factors of the company whose effect can cause a great loss to the company. PEST analysis describes the structure of some macro-environmental factors that are used in scanning, environmental fundamental element for a strategic measurement which affects all the firm of the company. PEST factors are crucial to the company’s environment which can affect the company’s growth or can even shut down a company. Such factors are beyond the company’s firm and can cause a great threat by themselves. Political components fundamentally incorporate the tenets and regulations made by the legislature and some lawful issues which incorporate formal to casual decides that are most to be trailed by the organization. Financial components incorporates the impact of monetary development, investment rate, swapping scale and expansion rate. Social variables incorporates social components and it likewise incorporates wellbeing distinguishment, populace development rate, age dispersion and security. Technological elements incorporates innovative angles which can bring down the impediment to entrance and which......

Words: 2094 - Pages: 9

Premium Essay

Pestle Analysis

...Political/Legal * Singapore is an enterprise friendly country. Several organisations are set up by the Singapore government to help businesses runs in a very systematic way. * Ministry of Trade and Industry (MTI) provide the vision of make Singapore a leading global city of talent, enterprise and innovation. * SPRING Singapore (Standards, Productivity, and Innovation Boards) helps for growing innovative companies and fostering and encouraging a competitive SME sector. * Lemon Law will not only benefit consumers and retailers but also boost Singapore’s retail industry in the long run. * Singapore is a country where enforcement units are very efficient and with very low corruption rate. (arun 2011) Economic * Singapore is known as vibrant free market economy. Its economy depending heavily on export. Also, it enjoys a higher per capita income than most of the developed countries (Kashyap 2011). * High inflationary pressures on Singapore will affect the consumers buying power. This pressure is cause by the financial crisis since 2008 onwards (arun 2011). * The unemployment rate in Singapore was last reported at 2 percent in the second quarter of 2012 (Trading Economics 2012). * Historically, The Singapore interest rate averaged 1.69 Percent (Trading Economics 2012). Increment of interest rate will affect the consumer’s spending power. Social Cultural * Singapore is an eastern country, which still follows the traditional families......

Words: 487 - Pages: 2