PEST Analysis PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macroenvironmental factors used in scanning the external environment to identify the impact of these macroenvironmental factors on the company.
For Amber, as the case study refers to a circumstance in April 2005, we have duly carried out the PEST analysis based on data up to April 2005 to ensure relevance and accuracy.
Unstable global geopolitical climate post-September 11* (2001)* – this results in reduced international and inter-continental air travel thus reducing the number of travellers who would stay in hotels generally Government restrictions on in-bound travel – visa for foreign travellers to the US (especially from Middle Eastern countries) were more controlled post-September 11 thus reducing in-bound tourists to the US Economic factors:
Economic growth rate The US economy growth rate slowed to 0.8%yoy in 2001 after the dot com crash, however in the subsequent years the growth rates continued to climb up signaling improving economic condition which would positively impact the hotel industry.
Interest rates From 2000 to 2005, the US Government has steadily lowered the interest rates to stimulate spending and investment. This will encourage more business transactions and consumption.
Inflation rates Inflation in the US has been steadily climbing up from year 2002 in line with the broad economic recovery – nonetheless the inflation rate is still below historical highs (between 8 – 9% in late 1970s) thus there wouldn’t be adverse effect on the economy.
Increasing oil prices From 2000 to 2005, oil prices almost doubled thus this causes higher transportation costs as well as being a drag on economic growth.
Population growth... [continues]
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