Pest Analysis of Indian Tyre Industry

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The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business. Basically it is a scan of macro-external environment, in which a business wants to operate.

Political Factors include:

• Tax policy

• Employment laws

• Trade restriction and Tariffs

• Political stability

• Trade Agreements

Economic Factors include:

• Economic growth

• Interest Rate

• Foreign Investment

• Raw material Availability

• Inflation

Social Factors include:

• Population growth rate

• Trend of Buyers

• Health Consciousness

• Career attitude

• Social cultural changes

Technological changes include:

• Industrialization

• R&D activity

• Advancement of technology

Political Factors

Political factors were supporting Indian tire industry as Indian Government especially reduces its taxes on raw material to promote the industry. Tariff and duties on the import and export of tires were set less so that cheaper tires and material could be imported and good quality tires can be exported. Tires made in India were mainly exported to other emerging countries such as Latin America, South-East Asia, Middle East and the Africa. On the other hand imports of tires from other countries are showing the supporting political environment.

Economic Factors:

The economy of was emerging and the total production of vehicles more than doubled between 1994 and 2004 so it had a good potential for the industry. Basically in 1926, the first tire was made by a British company Dunlop, and followers of Dunlop were other three foreign companies: The Americans Firestone, Good Year and Italian Ceat, but latter on Indian...
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