PEST Analysis
The analysis of the external macro environments that affects all firms is vital in strategic management process. P.E.S.T. is a short form for the Political, Economic, Social, and Technological features of the external macro-environment. The external factors usually are not in the firm’s control and at times are presented as threats. But the changes in the external environment also form new opportunities. Numerous of the macro-environmental factors are country specific to the areas and a PEST analysis will be carried out for all countries of attention. Some of the factors that might be considered in a PEST analysis include: -
• Political Factors. The factors, which assist the organization to develop a strategic corporate strategy, include, Political constancy in the country, threat of military incursion, legal structure for agreement implementation, detailed business rules & tariffs and preferential trade associates. Anti reliance regulations, Pricing system taxation, wage structures, working hour’s instructions, obligatory employee benefits and Industrial safety regulations are also considered when analysis of the organization is made.
• Economic Factors The analysis of the economic features of the country where the operations are being made is very essential. The economics factors required to be analyzed include, form of economic system in countries of operation, government interference in the market, proportional advantages of host country, exchange rates & stability of currency. The competence of financial markets, infrastructure quality, proficiency level of employees and labor costs are also to be considered while analyzing the economics. The economic growth rate, optional income, unemployment rate, price rises rate and interest rates play vital role in strategic analysis of a corporate plan.
• Social and Technical Analysis While analysis of a