Transcript PEST ANALYSIS

PEST FACTORS & IMPACT ON
INTERNATIONAL BUSINESS
GROUP MEMBERS :-
NAINA CHAUDHARI (6)
RINKU CHAUHAN (7)
KIRAN DANKE (8)
ADITI DESAI (9)
PRIYANKA DHANVEKAR (10)
Definition Of International Business –
“The economic system of exchanging good and services,
conducted between individuals and businesses in multiple
countries.”
PEST ANALYSIS
 P - Political changes
 E - Economic changes
 S - Socio - Cultural changes
 T - Technological changes
IMPORTANCE OF PEST ANALYSIS
 While entering in new business
 Helps to break free of unconscious assumptions
 Help to effectively adapt to the realities of the new
environment
KOTLER’S VIEW ON PEST ANALYSIS
 a useful strategic tool
 framework for reviewing a situation
 applied by companies to review a strategic directions
 effective for business and strategic planning, marketing
planning, business and product development and research
reports.
 PEST analysis is also known as:
STEP, PESTEL, PESTLE, PESTE, PESTLIED, SLEPT,
STEEPLE, STEEPLED, LE PEST C and LEPEST analysis.
SOURCES FOR PEST ANALYSIS
 Newspapers, periodicals, current books
 Trade organizations
 Government agencies
 Industry analysts
 Financial analysts
POLITICAL ANALYSIS
CASE OF MCDONALD’S
 McDonald’s established in California during the
1940s
 Aggressive plan to expand in all other cities of
Pakistan
 Franchises owned by Lakson Group of
Companies in Pakistan
 In Pakistan- consumer protection laws are not
very strong
 In countries like US, where the consumer
protection laws are very strong
SONY
 Government laws for minimum wage
 Less profit unless they increase prices of items.
CASE OF ENRON
 An American energy company based in Houston, Texas.
 In 1992, the Dabhol power plant near Bombay
 Supply 2,000 megawatts of electricity
 Decentralized government control over industrial
licensing
 opened the country more to foreign investment.
 Failed due to endless disputes over prices and terms of
the deal
ICI PAINTS(Bekshire, UK) :
 World’s largest manufacturing of paints and industrial
coatings.
 In 1965 ICI UK acquired a 50% in “Fullers Paints
Pakistan Ltd”
 Government has imposed 15% sales tax and heavy duties
on imports and raw materials.
 As ICI import 75% of its raw materials.
 Profit margin have decreased.
ECONOMIC FACTORS
 Businesses are affected nationally and globally
 Affect consumer confidence and behaviour
 Impact upon the nature of the competition faced by the
business.
 Affect the purchasing power of potential customers
ECONOMIC FACTORS
• Economic growth
• Interest rates
• Inflation rate
• Budget allocation
• The level of inflation
EFFECT OF INTERNATIONAL BUSINESS
ON INDIAN ECONOMY
 Entry of MNCs in India
Reason : new economic policy by government of India in July 1991
 incentives to the foreign investors
Now the question is how the MNCs are affecting Indian
economy whether they are useful for our economy or not ?
MNC’s AND INDIAN INDUSTRIES:
 Economists view –
 MNCs are helpful for Indian industrial sector
 New technique of production management techniques
 Increase competition in the industrial sector
 Demand for skilled persons
 Inflow of Foreign capital
SOFTWARE SECTOR
 TCS , Infosys have controlled salary escalations, resulting in
Wipro, Satyam, HCL to follow suit
 Difficult for them to remain the price setters
 Under pressure to match salaries with those offered by
MNCs
 MNC’S are increasingly recruiting employees
BISLERI’S EXPANSION IN EUROPE
 Ramesh Chauhan owned brand, Bisleri, is set to sell sparkling
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water in Europe and US.
Scope for BISLERI in the field
Compensate the deterioration of image
Silence the critics and increase the faith of the customer
International brand image
Witness a major tussle between Bisleri and Coca-Cola's
Kinley
 “The fact that we have reached out to international markets is
an acknowledgement of our quality and our penchant for
safety and purity”
- Ramesh Chauhan
INFLATION
 In Asia, Vietnam becomes the country suffered most from
inflation.
 Struggle for their lives every day, unemployment rate goes
higher, and many companies and factories have to shut down
because of inflation.
CEMENT COMPANIES AFFECTED
 Higher input costs, low market valuations and scaled up
capacity amidst reduced demand
 Growth rate is projected to drop below 10 % for the current
fiscal
 High inflation and home loan rates have slowed down the
growth trajectory of the real estate sector
INCREASE IN SPANISH
INVESTMENTS
 The Spanish investments in india rose five times to $158
million in last year
 Over ten leading companies entered the country
 Many Spanish companies are present in sectors like
infrastructure, insurance, auto components and ports and
more are keen to enter the market as India’s economy is quite
promising
 Invest in Spain is a government agency for promotion and
attraction of foreign investments in Spain.
 Spanish investment - $158 mn increased by 500% from the
previous year
 Investing in the automotive and infrastructure segments in
India
 Indian corporate like Infosys, Tata Consultancy Services,
ICICI Bank, Essar Group, Navneet Publications, X L Telecom
& Energy, Tata Motors and Kingfisher Airlines met Spanish
delegates.
BUDGET 2009: RETAIL SECTOR
DISAPPOINTED
 Budget had not mention FDI or industry status for retail
 Plans for increasing expenditure in infrastructure under
various programes, besides hiking the income tax ceiling,
will increase consumption
 Abolition of FBT and hike in allocation for rural and urban
areas will lead to boost in demand.
PROVIDE STIMULUS TO REAL ESTATE
SECTOR
 Indian economy as a whole has largely been insulated against
the global economic slowdown
 The Indian real estate sector has been severely been affected
keeping in sync with the fortunes of the global real estate
sector
 Need for the Government to provide a stimulus for the
industry to revive this ailing spectrum of sectors
SOCIO-CULTURAL ANALYSIS
MCDONALD AND HINDU CULTURE
 McDonald’s is the world’s largest user of beef
 “Maharaja Mac” – which
is made form mutton.
 “McAloo Tikki Burger”, which is
made from chicken.
 Found beef extract in the oil.
 Close McDonald’s 27 stores in the country.
PROCTER & GAMBLE’S CASE:
 Camay soap.
 Diapers.
COCO COLA: Labeled “No- alcohol”
on their bottles supplied
to the Gulf countries.
NOKIA:Introduced Hindi SMS
for Indian users.
TECHNOLOGICAL FACTORS
 Major impact on the business
 Affects business prospects, cuts down the profits and forces
the management to change the course of the business
operations
 Change in technology changes the work cultures, the
methods and the systems
Technological environment consists of: State of domestic or indigenous technology
 Facilities for Research and Development
 Technical Collaborations etc
IMPORTANCE OFTECHNOLOGICAL
ENVIRONMENT
 Non- replacement of new technology affects the survival and
growth prospects
 Advances helps to improve quality of product, increase
output and reduce the cost of production
 Latest technology enhance marketability of products and face
competition
iPHONE
 Apple deserved kudos for coming up with a product idea like
the iPhone and also implementing it successfully
 Aggressive entry into the mobile phone market and had
managed to attract the attention of the existing competitors
AIRLINE INDUSTRY
 Increasing use of the Internet has provided many
opportunities to airlines
 Long-term effort to promote Indian aviation infrastructure
 The Authority is developing modern communication,
navigation, surveillance, and air traffic management systems
for India's aviation sector that will help the country meet the
expected growth and demand for air passenger and cargo
service over the next decade
 Helps in attracting investments in improving the
infrastructure and services
 Microsoft's operating system Vista most recent generation
released worldwide on January 30, 2007
 Vista was aimed to improve the security of the most widely
used PC operating system in the world
 Reasons for Failure:-
- securities features were not much better than the previous
versions of Windows
- came with its own list of hardware requirements
-Vista ran slower on PCs than XP
 Prevented Vista from taking over from its predecessors
FAILURE OF HD-DVD
 HD-DVD group was holding a press conference, Warner Bros
withdrawing its support for HD-DVD
 Exclusively supporting backing rival format Blu-ray
 There were several factors that led to HD-DVD format lose
out to Blu-ray
 Most commonly cited explanation is that Sony did a better
job convincing major film studios