The external environment is crucial to the success of any company, in order to keep your business ahead of the competition the management team must continually adjust their strategies to reflect the environment in which their businesses operate. The business does not just operate inside its office walls, the business needs to react and act to what is happening outside of the office. The external environment consists of elements that lie outside of business and has the potential to influence the business in significant ways. Every day the market is constantly changing many new products are being developed and new companies are entering the market. There are many things that can be controlled however, there are also things that cannot be controlled,
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Harvard professor Francis Aguilar is thought to be the creator of PEST Analysis, which was addressed in his book “Scanning the Business Environment” published in 1967 (Ballowe, 2013). The PEST analysis allows the managers and the strategy builders to become aware as to where their market currently stands and where it will head off in the future (Makos, 2011).
Political Factors: These factors take into account the political situation of a country and the world in relation to the country. Legal factors and government regulations are assessed in terms of their potential to effect the trade markets and the business environment (Makos, 2011). The main areas that will be assessed in this situation are tax guidelines, political stability, trade regulations, employment laws and safety regulations which may have an impact on your business now or in the future. It is unlikely for a company to enter the market in a country where there is political unrest, for example Thailand’s role as Southeast Asia’s manufacturing hub was threatened. The president of Toyotas Thai unit Kyoichi Tanada, said last year that the company may pull out of a planned $609 million investment in Thailand if the political unrest continues, which would of been a huge blow for Thailand (Arbis, …show more content…
The German government plans to increase pension entitlements, if these plans were implemented it would make it much more difficult to decrease the already high labour tax (OECD, 2014).
Economic Factors: The German market is the world’s fourth largest economy and accounts for more than one – fifth of European Union GDP, according to enterprise Ireland they tend to move into third place by 2016. The German economy is highly export orientated and is worlds second largest exporter, according to Trading Economics German exports account for more than one-third of national output (Economics,
Harvard professor Francis Aguilar is thought to be the creator of PEST Analysis, which was addressed in his book “Scanning the Business Environment” published in 1967 (Ballowe, 2013). The PEST analysis allows the managers and the strategy builders to become aware as to where their market currently stands and where it will head off in the future (Makos, 2011).
Political Factors: These factors take into account the political situation of a country and the world in relation to the country. Legal factors and government regulations are assessed in terms of their potential to effect the trade markets and the business environment (Makos, 2011). The main areas that will be assessed in this situation are tax guidelines, political stability, trade regulations, employment laws and safety regulations which may have an impact on your business now or in the future. It is unlikely for a company to enter the market in a country where there is political unrest, for example Thailand’s role as Southeast Asia’s manufacturing hub was threatened. The president of Toyotas Thai unit Kyoichi Tanada, said last year that the company may pull out of a planned $609 million investment in Thailand if the political unrest continues, which would of been a huge blow for Thailand (Arbis, …show more content…
The German government plans to increase pension entitlements, if these plans were implemented it would make it much more difficult to decrease the already high labour tax (OECD, 2014).
Economic Factors: The German market is the world’s fourth largest economy and accounts for more than one – fifth of European Union GDP, according to enterprise Ireland they tend to move into third place by 2016. The German economy is highly export orientated and is worlds second largest exporter, according to Trading Economics German exports account for more than one-third of national output (Economics,