They tend to be a subject to government controls, and they will be guided by the prevailing economic conditions. Capital markets determine the conditions for alternative types of funding for organizations.
While economic conditions and government policy are closely related, they both influence a number of other environmental forces that can affect organizations. There are many other ways, however, in which government decisions will affect organizations both directly and indirectly, as they provide both opportunities and threats. At any one time either exported or imported goods can seem expensive or inexpensive, dependent upon currency exchange rates.
The issue of whether Pakistan country joins, or remains outside, the single Pakistani currency is a case in point. Although a depressed economy will generally be a treat which results in a number of organizations going out of business.Įconomic conditions are influenced by political and government policy, being a major influence affecting government decisions. Similarity, the opportunity to exploit a particular strategy successfully may depend on demand which exists in growth conditions and does not in recession. When the economy, as a whole or certain sectors of the economy, are growing, demand may exist for a product or service which would not be in demand in more depressed circumstances. The timing and relative success of particular strategies can be influences by economic conditions. In opposite circumstances Soccermight find that profitability throughout the industry is low. If demand is buyout, for example, and the cost of capital is low, it will be attractive for Soccer to invest and grow with expectations of being profitable.
#PESTEL ANALYSIS OF INFORMATION TECHNOLOGY INDUSTRY FREE#
The use of PEST, in this case, helps to break free of unconscious assumptions, and help to effectively adapt to the realities of the new environment.Įconomic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand. PEST is useful when a company decides to enter its business operations into new markets and new countries. The use of PEST analysis can be seen effective for business and strategic planning, marketing planning, business and product development and research reports. Kotler claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others.
A PEST analysis is one of them that are merely a framework that categorizes environmental influences as political, economic, social and technological forces. In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization’s supply and demand levels and its costs.Īccording to Kotter The “radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization” A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry.
PEST analysis is also known as: STEP, PESTEL, PESTLE, PESTE, PESTLIED, SLEPT, STEEPLE, STEEPLED, and LEPEST analysis.
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