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POLITICAL FACTORS

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These factors are all about how and to what degree a government intervenes in the economy or a certain industry

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POLITICAL FACTORS

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Basically all the influences that a government has on your business could be classified here.

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POLITICAL FACTORS

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This can include government policy, political stability or instability, corruption, foreign trade policy, tax policy/tax reforms, labor law, government budget and spending and trade restrictions.

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Tax reforms

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refer to revisions on the implementation and collection of taxes

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Tas Reforms

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These include increasing and lowering of existing tax rates as well as implementation of new ones.

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Political Stability

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The strength and effectiveness of the government in upholding its sovereignty and implementing the rule of law is another variable that affects the business sector.

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government policy, political stability or instability, corruption, foreign trade policy, tax policy/tax reforms, labor law, government budget and spending and trade restrictions.

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These are all factors that need to be taken into account when assessing the attractiveness of a potential market.

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Political Stability

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Transition to a new administration understandably causes uncertainties to the business community.

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ECONOMIC FACTORS

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it also affects the way companies price their products and services.

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GDP

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equivalent to total output is a measure of a country's economic performance

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GDP growth

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A growth means an increase in total output from previous periods, usually the previous quarter.

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Inflation

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is the lost in value of money which can also lead to increase in the prices of goods and services.

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inflation

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Economic growth and high money supply levels can lead to .

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interest rate

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The level of this economic factor is largely the responsibility of the country’s central bank

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Interest rates

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may be used to curb inflation.

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interest rate

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A fall in output will force firms to produce less goods and services and will require less input. A fall in labor input requirement means fewer workers needed leading to an increase in unemployment.

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SOCIAL FACTORS

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This dimension of the general environment represents the demographic characteristics, norms, customs and values of the population within which the organization operates.

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SOCIAL FACTORS

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This includes population trends such as the population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers.

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SOCIAL FACTORS

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These factors are especially important for marketers when targeting certain customers. In addition, it also says something about the local workforce and its willingness to work under certain conditions.

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Demography

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is formally the study of the population and its attributes.

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Demographic data

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include gender and age composition of the population, growth rate, mortality rate, income levels, etc.

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demographic data

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Knowledge of this of a country aids industries in gauging the size and other characteristics of their target segments.

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Demography

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What is the age distribution of the population?

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demography

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How big is the female population compared to the male population?

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Lifestyle changes

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include how people eat, dress, and communicate

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Beliefs, customs, and religion

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are other social factors that may affect the macroenvironment of industries.

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Religion,

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similar to other social factors, drives demand through consumer preferences, Industries try to answer questions such as, "What is the dominant religion or the market? Is it primarily a conservative market?"

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religion

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Knowledge of the beliefs and religion practiced by a social group allows companies to fine-tune their products and ensures that their products will be received positively.

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political factors

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Lobbying activities

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political factors

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Freedom of press

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Tax reforms

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refer to revisions on the implementation and collection of taxes

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Tax reforms

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These include increasing and lowering of existing tax rates as well as implementation of new ones.

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Tax reforms

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may affect the country's industries differently. Some reforms are sanctioned to target specific industries or businesses. As a general rule, an increase in the tax rate paid by producers reduces their revenue. As a result, producers may decide to either manufacture less goods and services or increase their prices to cover the higher tax costs

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Tax reforms

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an increase in any form of tax reduces his or her disposable income and consequently reduces quantity demanded of most goods and services.

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Tax reforms

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is the implementation of sin taxes in the Philippines

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Sin tax

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is an example of excise tax imposed on goods considered as vices such as alcohol and tobacco. The law was driven by public health considerations, but its implementation affected the tobacco and cigarette manufacturing industries in the country. The law made retail prices of alcohol and tobacco products steeper, thereby, discouraging consumption and lowering business revenue.

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Political Stability

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Government actions that undermine its credibility and power in ensuring the safety of its citizens may cause instability in the society.

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Political Instability

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Uprisings like EDSA People Power 1 and 2 are examples of

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national election

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is an example of a political factor that can potentially cause chaos and trigger political instability in the country. The police and military are usually on high alert during this time.

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Economic factors

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are determinants of a certain economy’s performance

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ECONOMIC FACTORS (economic growth, exchange rates, inflation rates, interest rates, disposable income of consumers and unemployment rates.)

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These factors may have a direct or indirect long term impact on a company, since it affects the purchasing power of consumers and could possibly change demand/supply models in the economy.

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a strong and stable economy.

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A steady growth in GDP signifies

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a higher cost of borrowing.

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A higher interest rate means

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high interest rates

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curb consumption and investments, which cause aggregate demand to decline. Lower demand leads to a slowdown in economic growth.

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population trends such as the population growth rate, age distribution, income distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes and cultural barriers.

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These factors are especially important for marketers when targeting certain customers

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Media – films, television shows, magazines, and more recently, the Internet (i.e. self-written blogs and popular websites)

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are the main sources of lifestyle influence around the world.

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beliefs and religion

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Knowledge of this practiced by a social group allows companies to fine-tune their products and ensures that their products will be received positively.

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Environmental scanning

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is the continual analysis of the environment inside and outside of your organization

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environmental scan

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is used to evaluate potential opportunities, threats and markets, and to learn any number of lessons that can affect your company.

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environmental scanning

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is a process that looks closely at the outside world to see what opportunities and risks might come up in the future.

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Environmental scanning

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requires people in an organization to search for opportunities, important lessons, trends, and weaknesses or threats outside of their organization which can affect the success of the company. Identifying these variables enables the organization to develop strategies to either exploit or counter the effects of these external industry forces.

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Demographics, Trends, Competition, Customers, Technology, Economy, Labor Supply, Political/Legislative Arena

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Components of external scanning that could be considered include:

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An organization needs to analyze changes in the market and the surrounding environment continuously. it may be a good idea to actively discuss your environmental scan at the top of each quarter.

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HOW OFTEN SHOULD AN ENVIRONMENTAL SCAN TAKE PLACE?

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Environmental scans are performed by the leaders of an organization, as they have the resources and insight to conduct research and complete in-depth analyses of the internal and external factors affecting the business’s environment.

However, they should be gathering information from all levels of the company because insight into your competitors can come from numerous places.

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WHO PERFORMS AN ENVIRONMENTAL SCAN FOR A BUSINESS?

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Missed opportunities and business failures

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Leaders who don’t prepare for marketplace shifts experience:

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Industry analysis

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is a market evaluation tool companies use to assess the level and intensity of competition in a specific industry.

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INDUSTRY ANALYSIS

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Businesses use this tool to understand their market position and evaluate how internal and external factors such as technological changes, demand and supply dynamics, access to finance and the entry of new rivals can affect their competitive advantage.

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INDUSTRY ANALYSIS

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The insights from this analysis can help a company identify potential threats and opportunities, predict future market changes and plan effectively to safeguard its market position. Besides giving businesses an in-depth understanding of their operating environment, these analyses can also help investors evaluate whether investing in a company is going to be profitable in the long term.

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Understand the business

Identify success factors and threats

Identify long-term trends

Evaluate growth opportunities

Aid investment decisions

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IMPORTANCE OF INDUSTRY ANALYSIS