Professional Documents
Culture Documents
Economic Factors
Economic factors have a significant impact on how
an organisation does business and also how
profitable they are. Factors include economic
growth, interest rates, exchange rates, inflation,
disposable income of consumers and businesses and
so on.
Social Factors
Also known as socio-cultural factors, are the areas
that involve the shared belief and attitudes of the
population.
These factors include population growth, age
distribution, health consciousness, career attitudes
and so on. They have a direct effect on how
marketers understand customers and what drives
them.
Technological Factors
Technological factors affect marketing and the
management thereof in three distinct ways:
New ways of producing goods and services
New ways of distributing goods and services
New ways of communicating with target markets
Legal Factors
These factors include health and safety, equal
opportunities, advertising standards, consumer
rights and laws, product labeling and product safety.
Environmental Factors
These factors have become important due to the
increasing scarcity of raw materials, pollution
targets, doing business as an ethical and sustainable
company, carbon footprint targets set by
governments (this is a good example were one factor
could be classes as political and environmental at
the same time.
FOUNDER
Harvard
professorFrancis
Aguilaris thought to be
the creator of PEST
Analysis. He included a
scanning tool called ETPS in
his 1967 book, "Scanning
the Business Environment."
The name was later
tweaked to create the
current acronym.
Advantages
Provides a simple and easy-to-use framework for
your analysis.
Involves cross-functional skills and expertise.
Helps to reduce the impact and effects of potential
threats to your organization.
Aids and encourages the development of strategic
thinking within your organization.
Provides a mechanism that enables your
organization to identify and exploit new
opportunities.
Enables you to assess implications of entering new
markets both nationally and globally.
Disadvantages
Users can oversimplify the information that is used for
making decisions.
The process has to be conducted regularly to be effective
and often organizations do not make this investment.
Users must not succumb to 'paralysis by analysis' where
they gather too much information and forget that the
objective of this tool is the identification of issues so that
action can be taken.
Organizations often restrict who is involved due to time and
cost considerations.
Ref:
http://www.free-management-ebooks.com/faqst/pestle-09.htm#ixzz4X
Disadvantag
es
This limits the technique's effectiveness as a
key perspective may be missing from the
discussions.
Users' access to quality external information
is often restricted because of the cost and
time needed to collate it.
Assumptions often form the basis for most of
the data used, making any decision made
based on such data subjective.
Ref:
IFE and EFE Matrices
Internal Factor Evaluation (IFE)
Matrix
is a strategy tool used to evaluate firms internal
environment and to reveal its strengths as well as
weaknesses.
IFE Matrix.
Strengths and weaknesses are used as the key
internal factors in the evaluation. When looking
for the strengths, ask what do you do better or
have more valuable than your competitors have?
In case of the weaknesses, ask which areas of
your company you could improve and at least
catch up with your competitors?
TOTAL 1 2.79
EFE MATRIX: GOOGLE
(External factor evaluation matrix)
Sr. Details Rating Weight Weighted
No. average
score
OPPORTUNITIES:
1 Forming of policies to remove cultural barriers for 2 0.07 0.14
employees
2 Controlling of religious abuses on websites can 1 0.03 0.03
increase views and clicks to specific sits i.e.,
YouTube
3 Secure browsing with least chances of viruses and 4 0.1 0.4
hacks
4 Development of Strong corporate culture for 3 0.09 0.27
attracting expert employees of industry
5 Mobile computing is an open, unchartered area 4 0.3 1.2
THREATS:
1 Fast pace of innovation and continued growth 4 0.2 0.8
required in industry
2 Acceptance of internet in colleges and cultural 3 0.04 0.12
adaptation behavior
3 regulatory issues related to monopolistic power 3 0.07 0.21
4 copyrights and material filtration laws for children 2 0.03 0.06
5 Exchange rate risk, negative tax consequences, 3 0.06 0.18
foreign exchange controls
6 Due to global recession, it's difficult to maintain and 1 0.01 0.01
attract talented employees