Pest Analysis

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Royal Dock Business School

Course: BA (Hons) in Accounting and Finance

Module Name: Organisations Management and People

Module code: HR 1004

Id : 105353

Pest analyses, also partially known as “STEP”, has always been undertaking a vital role to every dynamic of all business organisations. Each and every organisation has to undergo involvement and interference of certain factors relating political, environmental, social and technological factors (PEST). These factors may contain striving from other companies, price variation, unreliable raw material supplies, government regulation and also ecological catastrophes, According to “MANAGEMENT CONCEPTS & PRACTICES” BY Tim Hannagan fifth edition. Pest analyses are involved with the behaviour of aggregate economy and the factors are extremely crucial and should be taken into consideration in every position of business.

A strategic development and a structure of any business organisation is highly likely to be affected by political factors in almost every cases, as government interference is captivating by the rules and regulation when an organisation operates in that particular country or nation. In addition, Every business should keep themselves up to date in terms of new government rules which might effect the business organisation. For example, Kfc and few other fast food shops were fined by the government in Bangladesh as they have failed to maintain the features obligated within the health, safety and hygienic rules. Another practical example for instance would be Sony Corporation approaching to promote by creating a profile globally and preparing employees by Advanced Global Leadership Programme, hence to gain their goal they had to go through and follow rules that are considered by the government in that particular country or nation.

The economic environmental issues of an organisation connect with the economic system of the country in which the business is functioning and plays an important role in the behaviour of organisation and management. The economic factors are concerned with the spending and buying pattern of consumers which includes the distribution of disposable income of the consumers, inflation and its affects on consumer’s purchasing power and the state of the economy. Furthermore, the economical environmental factors have great impact over the organisation structure and decision makings activity as they should be capable of estimating future prices and expenditure of the organisation. However, the government intervention on organisations regarding economical environmental factors can be influenced extensively. For instance, a multinational company like Unilever have been operating in Ghana which is a developing country and producing various consumer products for them. Since the economic condition of Ghana is very poor and people has less purchasing power, Unilever is producing tiny packs of tooth-paste and Frytol cooking oil as that is what they can afford to buy.

Social cultural factors are very significant factor on analysing business strategy as it has an existence inside out in business in terms of betterment of surroundings and health and safety, hence creating a standing and impression of the consumers. The social factor considers every attributes and viewpoint of culture including age distribution, gender difference, population growth, health conscious, issues on greenery environment and environment social responsibility etc. For example, trade union in South Africa is concerned about Levi’s (The largest jeans producer at present) as the company is sacking workers for not reaching the objectives. Another real example is Unilever, which opened a school in Ghana for educating the young nations in the country and benefiting the community where it works.

Technological factor has an important role in every business in this modern world. the changes in technology can have enormous effect...
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