PEST analysis

Date: 2015-10-07; view: 920.

What are the strengths, weaknesses, opportunities and threats relating to Winiary? Construct a SWOT analysis to illustrate them.

‘THEORY-3' POINT

PEST stands for political, economic, sociocultural and technological factors. The PEST analysis is a useful tool for monitoring and evaluating forces which affect the organization over the long term. Below are the headings with a few questions that arise under each one:

1. Political-legal environment

· Is the existing government a stable one, and what is the strength of any opposition to it?

· What constraints has the government imposed on business, or is likely to impose in the future?

· In the EU, what forthcoming legislation, such as antitrust and employment laws, is likely to affect the business?

1. Economic environment

· Is the economy growing, or is the recession looming?

· Are wages and consumer spending rising?

· Which sectors of the economy are growing and which sectors are not?

· Which regions of the country are experiencing the best growth?

· Is there high unemployment?

1. Sociocultural environment

· Is the society culturally diverse?

· What are the educational levels of the population in general?

· To what extent do women have educational opportunities and play an active part in business life?

1. Technological environment

· What is the level of technology education and training which would influence the recruitment of skilled staff?

· Is technological innovation encouraged?

· What funding is available, from government and elsewhere, for technology development?

· How computer literate is the society in general?

The PEST analysis does not cover all aspects of the business environment. There is an expanded version of this acronym which is LE PEST C. It allows including legal factors as a separate heading followed by ecological factors. Lastly, the competitive environment is added to provide basis of a more comprehensive scanning. Both SWOT and PEST are also used in marketing planning. So,

The figure below provides a summary of the key variables in the international environment.

►Question/Answer session:

1. Why is the PEST analysis particularly useful for strategic managers in international businesses?
2. How can the PEST analysis be useful for a Russian company if it is considering expanding to China, India and the Philippines? What questions does the PEST help answer?
3. According to the figure above, explain each of the key variables in much broader terms.

‘WWW.1' POINT

►McDonald's is famous for its blended ‘2-in-1' (globalization and localization) strategy. Go to www.mcdonaldsindia.com, click on ‘West Zone', surf ‘Overview' section on ‘About us' page, then move on to ‘Press kit' section, where you can find info on McDonald' blended strategy in files named ‘McDonald's – a local company' and ‘Respect for the customers we serve'. Be ready to answer (in detail) the following question:

• How does McDonald's change or adapt its strategy in response to a local community?

In 2001 the McDonald's Corporation based in Chicago bought a 33% minority stake in Pret A Manger. Go to www.pret.com to gather some info on the company.

· Why do you think McDonald's Corporation bought stakes in this particular player in the food industry? Could it help McDonald's adapt its strategy in response to the local Indian environment? If so, how?

In 2001 American Hindus initiated a lawsuit against McDonald's. Surf the Internet to learn about the reason for the lawsuit and answer the following question:

· Why do you think in the same year McDonald's, in a change of its strategy, has embarked on buying stakes in such companies as Chipotle Mexican Grill, Donatos Pizza, Aroma coffee bars and Pret A Manger.

‘CASE-2' POINT