Transcript External Environment

External Environment
IB Business and Management
Learning Outcomes
• Prepare a PEST analysis for a given situation
and use it to analyse the impact of the
external environment on a firm
• Evaluate the Impact on a firm’s objectives
and strategy of a change in any of the PEST
factors
• Explain how external opportunities and
threats can impact on business decisionmaking and SWOT Analysis
Business Activity
External Factors
Finance
Marketing
Inputs/
resources
Outputs
The
organisation
Land
Labour
Capital
Enterprise
People
Production
External Factors
Goods
and
services
Achieving business
objectives….
• In the pursuit of achieving their aims and
objectives businesses face challenges and
opportunities from outside the organisation……
We can call these PEST Factors (Or PESTLE,
LEPEST)
So…. What does PESTLE mean?
P
E
S
T
L
E
A.K.A PEST, LEPEST, STEEPLE
PEST Analysis
• A PEST analysis of an audit of the external
environment of a firm.
• External influences are outside of the
control of the firm
• It involves trying to identify any potential
Opportunities or Threats that the firm may
be presented with
Why do a PEST Analysis?
• ‘Forewarned is forearmed’ What is the
meaning of this saying?
• PEST may be done at any time but is
particularly useful at times when strategic
decisions are being made
• Could be done in general or for a specific
industry
Task - Brainstorm
• What might these external factors be?
Political
Economic
External
Factors
Social
Technological
Political
• How and to what degree a government
intervenes in the economy. Specifically, political
factors include areas such as:
• Tax policy (Consumer and Corporate)
• Employment law
• Environmental law
• International trade restrictions
• Competition legislation
• Consumer protection Law
• Government attitude and procedures
• Political stability
Economic
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Economic Growth
Monetary Policy (interest rates)
Government Spending
Unemployment
Exchange rates
Inflation
Trade Cycle
Consumer Confidence
Social
• Income Distribution
• Demographics (Age, Gender, Family Size,
Occupations)
• Social Mobility
• Lifestyle
• Attitudes to Work and Leisure
• Fashions and Fads
• Attitude to work
• Living conditions
Technological
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Government spending on research
R&D activity
Speed of technology transfer
New discoveries
Rates of obsolescence
Energy use and costs
New materials
Developments and availability of ICT
Internet
Your Task….
• We don’t have time to cover all of these
PEST factors in detail.
• Over half term please read the ‘What you
need to know’ document
• Add any questions you might have to the
google doc ‘PEST Questions’
• We will go through any questions after the
holidays.