The PEST analysis, like a SWOT analysis studies four dimensions. However, a PEST analysis looks at the political, economic, socio-cultural, and technological factors. The difference between a PEST analysis and a SWOT analysis is that a SWOT analysis analyzes internal factors whereas a PEST analysis involves examining the external factors that affect one’s work environment. Organizations conduct PEST analyses in order to create strategies going forward. For my PEST analysis, I am going to analyze the external factors that could affect businesses.
PEST Analysis for Businesses
FACTOR
OPPORTUNITY
THREAT
POLITICAL
• Changes in government policies
• How stable the government is
• Government impacts the economy
• These factors can create business …show more content…
One way is inflation. Inflation is a general increase in prices. This affects businesses because it will dictate consumer spending. It will also affect inventory costs as well. Another factor is deflation. Deflation is the general decrease in prices. Unlike inflation, when there is deflation, consumers are more willing to spend their money. The last factor is the unemployment rate. If the unemployment rate is high, then there will be a lower staff turnover which means that employees are less likely to be able to find a job, although recruitment should become easier. If the unemployment rate is low, then it will be hard to recruit people, however, consumers will have more income which means that they will be buying more products (Riley). Because of these factors, the company can benefit if the government maintains a steady interest rate because it will provide opportunities of loan if needed. This means that there is more security for the company because they will not have to worry about getting a loan because there is are not changes. However, changes in the interest rate structure can discourage the firm to go for credit which can be threatening. Companies generally would not go for a loan if the interest rates are fluctuating because there is no …show more content…
For example, if the economy is stable, then it will result in a positive impact in the income levels of people. If a person’s income increases, then it will increase the success of businesses. Something that can be threatening for a business is demographics. Demographics can include: Income (as discussed before), age, and location. Demographics can be obtained through market research surveys. These surveys can be conducted by telephone, email, or in person. Demographics can be a threat because it is important to target the correct audience, and a company does not want to have any misconceptions resulting in losing
PEST Analysis for Businesses
FACTOR
OPPORTUNITY
THREAT
POLITICAL
• Changes in government policies
• How stable the government is
• Government impacts the economy
• These factors can create business …show more content…
One way is inflation. Inflation is a general increase in prices. This affects businesses because it will dictate consumer spending. It will also affect inventory costs as well. Another factor is deflation. Deflation is the general decrease in prices. Unlike inflation, when there is deflation, consumers are more willing to spend their money. The last factor is the unemployment rate. If the unemployment rate is high, then there will be a lower staff turnover which means that employees are less likely to be able to find a job, although recruitment should become easier. If the unemployment rate is low, then it will be hard to recruit people, however, consumers will have more income which means that they will be buying more products (Riley). Because of these factors, the company can benefit if the government maintains a steady interest rate because it will provide opportunities of loan if needed. This means that there is more security for the company because they will not have to worry about getting a loan because there is are not changes. However, changes in the interest rate structure can discourage the firm to go for credit which can be threatening. Companies generally would not go for a loan if the interest rates are fluctuating because there is no …show more content…
For example, if the economy is stable, then it will result in a positive impact in the income levels of people. If a person’s income increases, then it will increase the success of businesses. Something that can be threatening for a business is demographics. Demographics can include: Income (as discussed before), age, and location. Demographics can be obtained through market research surveys. These surveys can be conducted by telephone, email, or in person. Demographics can be a threat because it is important to target the correct audience, and a company does not want to have any misconceptions resulting in losing