European Union and Stricter Environmental Protection

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PEST - Analysis

This analysis is a helpful tool to take a closer look at the general environment. Although the PEST analysis rely on past events and experience, it can be used as a forecast of the future (Wilson and Gilligan, 1998). Political factors

The political environment is good. The government is stable and reliable, even if Britain fails to achieve total agreement with some EU policies from time to time. At the present no EU directives are known which will have a direct effect on the UK clothing retail industry in the near future.

Due to the EU membership a trend can be seen towards stricter environmental protection legislation. This may have a direct or indirect effect on NEXT or his suppliers. Economic factors

Looking at the economic environment, it is somewhat tricky since on the one hand there is the strong sterling compared to the Euro. Euroland encourages imports and endeavours to hold domestic prices at an attractive level. But on the other hand it is difficult for the UK to be competitive outside its boundaries because of the high pound sterling exchange rate against the Euro. As NEXT sells about 96% in the UK marketplace, this may currently only have a limited effect, but could be more important in the future when thinking globally. Fig. 2

This can also be seen on the "Big Mac - Cross Rates" table, where hamburgers sold in the UK are more expensive than in most other countries. So an investment outside the UK might be very attractive - also speaking of "reimports" to transfer the goods back into the domestic market. Source: see Chapter 7 Another issue is the falling unemployment rate. For the UK population this is good news but for companies like NEXT, this has different implications. For NEXT it means higher expenditure on wages, as well as greater difficulties in recruiting good employees. Social factors

Speaking of the socio-cultural future it should be mentioned that people retire earlier these days, as well as...
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