Pest Analysis Essay

680 Words Apr 18th, 2012 3 Pages
Demonstrate an understanding of PEST analysis (macro-environmental assessment) by identifying the key factors of change in the environment for an organization of your choice. Critically analyze the impact of these changes on the market and the corresponding strategies to tackle these changes.

I would like to propose milk powder in the mainland China as an example to illustrate the PEST analysis.

Political - The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses.

➢ In the mainland China, the government had passed regulation limiting families to one child each in 1970s. People used to have four or five children in their families and now reduced to one
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It helps the sales of milk powder.

➢ As we discussed, the population structure in the mainland is changing. Fewer children and more elders are the factors directly affecting the growth of milk powder.

Technological - Technology is vital for competitive advantage, and is a major driver of globalization.

➢ Milk powder was considered as a luxury good because the price was high and it was not a must for the infant. As technology is much more advanced, the cost of producing milk powder is much lower. It makes more people could afford.

➢ The advanced technology allows manufactories produce the milk powder with richer nutrition

➢ In order to cope with the drop in the number of infants, the milk powder companies try to invent different kind of products for different ages and gender. They will produce the milk powder with high calcium and other nutrition for the teenagers’ growth. They will also produce milk powder with low fat for the ladies and with some anti-ageing nutrition for the elders. It enlarges the targets in the market and makes less dependent on one target.

➢ To reduce the selling price, the most efficient way is to reduce the cost. Nowadays, companies move to the mainland for the production. The low labour cost and the cheaper material can lower the production cost. It can stimulate the sales of the milk

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