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PEST Factors Affecting IB
PEST Factors Affecting IB
International Business
Presented by:
Yogesh Godhwani
33
Balaji Gopal
08
Namita Kulkarni
47
Prashant Mehta
Gaurav Bhatia
16
Lakshmi Suresh
51
Agenda
What is PEST analysis
Importance In International Business
Political and Legal environment
Economic environment
Social Environment environment
Technological environment
Case Study McDonald's
Conclusion
Bibliography
PEST Analysis
Acronym for
Political
Economical
Social
Technological factors
Concerned with External
Macro Environment
Importance in
International Business
Framework for reviewing a NEW ENVIRONMENT
Helps to
break free of unconscious assumptions
effectively adapt to the realities of the new environment
Thus aiding effective
business and strategic planning,
marketing planning,
business and product development etc.
Political Factors
Affecting International Business
Political Systems: Party Systems
Democracy
High in Political rights & civic liberties
Eg: India, U.S.A, Australia etc
Totalitarianism
Eg: China, Vietnam, North Korea etc
Politics & Economics Mix
Eg: Thomson drops bid for LTV Division
Minimization of Risks
Stimulation of the local Economy
Eg: IBM in FRANCE
Employment of Nationals
Eg: Dell & IBM in India & Gulf.
Sharing ownership
Eg: Ford reduces share to 40% in Africa.
Being Civic Minded:
Eg: Heinz funds nutrition studies in China.
Legal Factors
Affecting International Business
Economic
Environment
Economic Factors
Affecting International Business
Home
Country
Host
Country
Global
Level
Home Country
Conducive
Economic policies
Trade and commercial policies
Promotional and regulatory measure
Host Country
Major Criteria
Market Size
GDP
Industrialisation
Purchasing Power
Foreign Exchange
Income Levels
Economic Diversity
Global Level
International Organisations
Trade Agreements Between Countries
NAFT
A
EU
ASEA
N
Social
Environment
Social Factors
Affecting International Business
Social factors include the demographic and cultural
aspects of international business.
Demographics
Class structure
Education
Culture
Emphasis on safety
Entrepreneurial spirit
Attitude
Leisure interests
Example: Motor
Motor Car
Car Manufacturers
Manufacturers
Example:
SOCIAL FACTORS
Brand image
Health aspect
Energy consumption
Technological
Environment
Technological Factors
Affecting International Business
Recent technological developments
Technology impact on product offering
Impact on cost structure
Impact on value chain
Company Background
It has been synonymous to what is widely-accepted
the fast-food concept.
Operates over 31000 stores all over the world
One of the first to perfect the concept of fast service
in the food industry in its early days of operations in
1955.
Political factors
factors
Political
Economic Factors
Dealing with international sourcing for its material
Compliance with the tax structures that vary with the
country.
Economic condition and growth of the country is an
important indicator of demand.
Technological Factors
Integrated technology in the management of its inventory system
and value chain.
Bibliography
International Business R. Chandran.
Ebesco.com, IB by Subbarao
http://ivythesis.typepad.com/term_paper_topics/2010/10/pestle
-analysis-to-explain-companys-international-strategy-for-mcdo
nalds-.html
http://www.marketingteacher.com/lesson-store/lesson-internat
ional-marketing-environment.html
http://ezinearticles.com/?Key-Principles-of-PEST-Analysis&
id=5791508
http://ezinearticles.com/?Key-Principles-of-PEST-Analysis&
id=5791508