PEST Analysis 1

THE PEST ANALYSIS





PEST ANALYSIS FOR AH HOT & SPICY FAST FOOD

Waqas-Ul-Haque
(MC130200585)

Virtual University of Pakistan

Dr. Nadeem Bhatti

Introduction to Business – MGT-211








PEST Analysis 2


Abstract
We can analyze various different factors in a firm’s macro environment by the use of the PEST
framework. The PEST analysis of current trends in marketing seems to be favoring the overall
industry. Whereas, country’s overall political instability may affect the business negatively. In
Islamabad political environment quite stable as compare to other cities of Pakistan which is
positive for our business. If we see economically situation is not that bad to start a new business
in Islamabad as people have buying power in this region. Islamabad socially quite advance city.
People of Islamabad are very literate and their earning capacity is also good so that they can
afford to go out in leisure time.

















PEST Analysis 3

PEST ANALYSIS FOR AH HOT & SPICY FAST FOOD

Introduction
PEST analysis (Political, Economic, Social and Technological analysis) describes a framework
of macro-environmental factors used in the environmental scanning component of strategic
management. It is a useful strategic tool for understanding market growth or decline, business
position, potential and direction for operations (PEST analysis, 2013).
AH HOT & Spicy Fast Food setting up a new business in Islamabad Pakistan. Islamabad is the
capital city of Pakistan and the ninth largest city in the country. The population of the city has
grown from 100,000 in 1951 to 1.15 million as of 2011. Since its foundation, Islamabad has
attracted people from all over Pakistan, making it one of the most cosmopolitan and urbanized
cities of Pakistan. As the capital, Islamabad is the seat of the Government of Pakistan; the
Presidential Palace (Aiwan-e-Sadr) is also located here. Islamabad is home to the Pakistan
Monument, which is one of the two national monuments of Pakistan. Islamabad is a modern city
located in the Pothohar Plateau in the northeastern part of the country. Islamabad has the highest
literacy rate in Pakistan (Islamabad, 2013).
Islamabad is a net contributor to the Pakistani economy, as whilst having only 0.8% of the
country's population, it contributes 1% to the country's GDP (Economy of Islamabad, 2013).
Being the capital of the country, Islamabad has a modern culture that is at synch with other
internationalized cities. It has a relatively recent history, being established as a planned city just
50 years ago. Islamabad has a reputation of being a thriving, business-minded capital that lies in
the centre of Pakistan's growing urbanized scene. Many different types of Pakistani cuisine as
well as international cuisine have developed a trail in the city's culinary scene. Fast food chains
are common as are traditional food outlets (Culture of Islamabad, 2013).







PEST Analysis 4

Literature Review
PEST Analysis
PEST analysis (Political, Economic, Social and Technological analysis) describes a framework
of macro-environmental factors used in the environmental scanning component of strategic
management. It is a useful strategic tool for understanding market growth or decline, business
position, potential and direction for operations (PEST analysis, 2013).
PEST Analysis is a simple and widely used tool that helps you analyze the Political, Economic,
Socio-Cultural, and Technological changes in your business environment. This helps you
understand the "big picture" forces of change that you're exposed to, and, from this, take
advantage of the opportunities that they present. (PEST analysis, identifying big picture, 2013).
PEST Analysis is useful for four main reasons:
1. It helps you to spot business or personal opportunities, and it gives you advanced warning
of significant threats.
2. It reveals the direction of change within your business environment. This helps you shape
what you're doing, so that you work with change, rather than against it.
3. It helps you avoid starting projects that are likely to fail, for reasons beyond your control.
4. It can help you break free of unconscious assumptions when you enter a new country,
region, or market; because it helps you develop an objective view of this new
environment (PEST analysis, identifying big picture, 2013).
Political Factors
 Islamabad is the capital of Pakistan and that is why politically quite stable as compare to
other cities of Pakistan.
 As elections ahead and there is no law and order in other cities of Pakistan except
Islamabad.
 Starting a new business in Pakistan has been made easier in modern times due to the use
of technology. Most of the steps can be completed online. You will still need to visit local
agencies to obtain necessary paperwork to start online registration and to complete the
final steps of the process, however (New business in Pakistan, 2013).
 The Government of Pakistan is committed to provide wholesome food to the people.
Ensuring food safety is essential requirements for protecting public health, as food borne
illnesses reduce human productivity, tax health care system and affect economic growth.
The policy will help in ensuring food safety; an essential requirement for protecting
public health (Nutrition, 2013).



PEST Analysis 5

Islamabad is politically stable city among other cities of Pakistan. Starting a new business
here is not that difficult as we can register our new business online but we have to keep the
quality and standard of the food up to international standards. Unemployment is creeping up
and we can hire labor at low rate.
Economical Factors
 The top income tax rate is 25 percent, and the top corporate tax rate is 35 percent. Other
taxes include a general sales tax (GST) and an interest tax.
 The overall tax burden equals 10.1 percent of total domestic income.
 Government spending is equivalent to 19.1 percent of GDP.
 The deficit remains over 5 percent of GDP, and public debt is about 60 percent of GDP.
 Please find below the economic indicators of Pakistan.
Economic Indicators
Indicators
2001-
02
2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-09
2009-
10
2010-
11

2011-12
2012-
13
(Jul-
Mar)
Exports
(Billion $)
9.13 11.16 12.31 14.39 16.47 17.01 19.22 17.79 19.63 25.44 22.64(P) 18.333
Imports
(Billion $)
10.34 12.22 15.59 20.6 28.58 30.54 39.96 34.82 31.05 35.73 36.52(P) 29.465
Trade Balance
(Billion $)
1.2 1.06 3.28 6.21 12.11 -13.53 -20.74 -17.03 -11.42 -11.11
-
15.48(P)
-11.1
FDI Inflow
(Billion $)
0.49 0.80 0.95 1.52 3.52 5.13 5.15 3.72 2.15 1.63 0.81 1.591
Foreign
Investment
(Billion $)
0.48 0.82 0.92 16.68 3.87 8.42 5.19 2.67 2.09 1.98 0.71 0.622
Worker
Remittances
(Billion $)
2.39 4.24 3.872 4.17 4.6 5.49 6.5 7.81 8.91 11.201 12.728
9.23
(Jul-
Feb)
Forex
Reserves
(Billion $)
6.43 10.72 12.33 12.61 13.14 15.18 10.83 12.23 16.07 18.25 15.417 13.376
Exchange
Rate
(Rs. / US$)
61.00 57.70 57.92 59.66 60.16 60.50 71.0 88.90 86.21 85.95 90.75 97.89
GDP Growth 3.60% 5.10% 6.40% 8.40% 6.60% 7.00% 5.80% 2.10% 4.10% 4.10% 2.4% -
Inflation 3.40% 3.30% 3.90% 9.30% 8% 7.90% 10.30% 13.10% 12.90% - - -
 Per capita income is good in Islamabad as compare to other cities of Pakistan.
PEST Analysis 6

 The per capita income in Pakistan rose by 9.5 per cent to $1,207 in fiscal 2010-11, the
highest growth in recent past reflecting an improved well-being despite a slowdown in
the economy. (Dawn, 2011 May 16).
 Buying power is quite good in this region as this is the capital and high class people lives
in Islamabad.
If we see our new business economically we can say that it will definitely help in our country’s
economy. As some people get job through our business and the tax we pay to Govt. will also pay
vital role.
Social Factors
 As Pakistan is a Muslim country people keep in their mind of Halal food. As AH Hot &
Spicy Fast Food would provide Halal food people will prefer to come and eat.
 Islamabad’s high class gentry in their leisure time used to go for dining out which is
positive for our business.
 Being capital lot of foreigner visits Islamabad frequently and they also like to hangout on
good places. So we have to keep in mind that the place must be in good area where high
class people prefer to come.
Technological Factors
 In general, the restaurant industry is a low-technology industry. If there are strong
technological demands in a market, this may make it difficult to enter the market. In the
restaurant industry, specialized equipment is the largest technological factor. For
example, if all the pizzerias in a market use specialized ovens to cook their pizzas
quickly, then it will likely be necessary to acquire such an oven to compete with these
restaurants (Restaurant PEST analysis, 2013).
 As we know that in Pakistan we are facing power crisis / load shedding and to keep our
customers interested in our restaurant we have to be technologically sound. In case of
power failure we should use generators so that our customers would prefer to come at our
place and enjoy their outing.


Conclusion
The PEST analysis of current trends in marketing seems to be favoring the overall industry.
Whereas, country’s overall political instability may affect the business negatively. As people
avoid going out in their leisure time because of current situation.

PEST Analysis 7

References
Culture of Islamabad (2013, April 29). Retrieved 29, 2013, From Wikipedia:
http://en.wikipedia.org/wiki/Culture_of_Islamabad
Economy of Islamabad (2013, April 29). Retrieved April 29, 2013, from Wikipedia:
http://en.wikipedia.org/wiki/Economy_of_Islamabad
Economic indicators, Board of Investment (2013, April 29). Retrieved April 29, 2013 from
www.pakistan.gov.pk:
http://www.pakistan.gov.pk/gop/index.php?q=aHR0cDovL3d3dy5wYWtib2kuZ292LnBrL2luZ
GV4LnBocD9vcHRpb249Y29tX2NvbnRlbnQmYW1wO3ZpZXc9YXJ0aWNsZSZhbXA7aWQ
9MTE4OmVjb25vbWljLWluZGljYXRvcnMmYW1wO2NhdGlkPTkxNjphYm91dC1wYWtpc3
RhbiZhbXA7SXRlbWlkPTEzNA%3D%3D
Islamabad (2013, April 29). Retrieved April 29, 2013, from Wikipedia:
http://en.wikipedia.org/wiki/Islamabad
New business in Pakistan (2013, April 29). Retrieved April 29, 2013, from www.ehow.com:
http://www.ehow.com/how_5485804_start-new-business-pakistan.html
Nutrition, National food safety policy (2013, April 29). Retrieved from National Institute of
Health: http://www.nih.org.pk/Nutrition.asp

PEST Analysis (2013, April 28). Retrieved April 29, 2013, from Wikipedia:
http://en.wikipedia.org/wiki/PEST_analysis
PEST analysis, identifying big picture Opportunities and Threats (2013 April 29). Retrieved
April 29, 2013, from www.mindtools.com:
http://www.mindtools.com/pages/article/newTMC_09.htm
Per capita income (2011, May 6). Retrieved April 29, 2013 from dawn.com:
http://dawn.com/2011/05/06/per-capita-income-rises-to-1207-2/
Restaurant PEST analysis (2013, April 29). Retrieved April 29, 2013 from www.ehow.com:
http://www.ehow.com/info_7911098_restaurant-pest-analysis.html