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1.5 - External Environment

1.5 - External Environment

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Published by IB Screwed

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Published by: IB Screwed on Aug 26, 2010
Copyright:Attribution Non-commercial

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11/02/2013

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 http://ibscrewed4business.blogspot.com/ 
1.5
 –
External Environment
The challenges presented to a business can affect their performance.
PEST Analysis
This looks at the external environment of a business and how it may affect their activity.This allows them a quick way to see any constraints on their plans and strategies. It is a verysimple method, while still allowing for a thorough and logical analysis.
PEST
stands for:
 
Political
 
Economical
 
Social
 
TechnologicalThis might also be extended to
STEEPLE
to include the following factors:
 
Ethical
 
Environmental
 
LegalSince this only looks at the external factors of business activity, it includes threats to thebusiness, such as recession or inflation, and any opportunities, such as lower taxes.
 
 http://ibscrewed4business.blogspot.com/ 
A PEST Analysis should be done in the following three steps:
 
Brainstorm
 
 –
all the factors likely to affect the business
 
Discuss
 
 –
which ones will have the most significant impact
 
Summarise
 
 –
the factors in the PEST template to further development of businessstrategy or to act as a starting point.
 
 http://ibscrewed4business.blogspot.com/ 
Political
These are
changes in the government
, regionally, nationally and internationally, which canhave a huge effect on business activity. This can include public spending or internationalrelations. The relationships a country has with others can either open or close markets tothe business.These are closely linked with legal changes, such as consumer protection legislation,environmental legislation, workplace health and safety laws and employment laws.Political factors might include:
 
The stability of the government
 
Taxes
 
Government spending
 
Industrial policies
 
International relations
 
Employment and consumer laws
 
Competition policy
 
Environmental protection measures
 
Foreign trade regulations [tariffs, embargos and quality control]It is important to assess political factors at the regional, national and international level.
Political Opportunities and Threats
Government actions can control business behaviour and affect economic activity.
Fiscal Policy 
This is when the government use taxes and expenditure policies to influencethe economy. This can come in a number of forms:
Direct Tax
 
 –
Paid straight from the income, wealth or profit of individuals andbusinesses.

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