The Scanning of the external environment before creating a business strategy is highly recommended as it can highlight a number of influencing factors that could possibly have effect on your company or business. The external macro-economic factors can be analyzed with the PEST Analysis. It is an important tool to measure the market. It investigates the various factors that are bound to have a profound impact on the company’s health & performance. The PEST analysis is based upon four major factors which are assessed in relation to the company.
1. Political Factors
The political factor revolves around the governing body’s behavior in economy-related laws. The political laws and changes in politics are closely linked to the legal changes. The issues that are to be considered are environmental legislation, health & safety regulations, and employment laws. The political factors are to be kept in mind before planning the marketing strategy of a company.
2. Economic Factors
The economic factors have a direct effect on the economy of a company. The economy has to face fluctuations with the booms & slumps in the economic activity. The issues to be considered are the interest rates, the level of inflation rates, the economic growth, the labor laws, the unemployment levels. Through the economic factor, the company can decide the strategic management. The exchange rates have a direct influence on the company’s economy and performance.
3. Social Factors
The social factor is related with the demographics and the cultural aspects of a society. The company can get an overview of the socio-economic status the market. The issues to be considered include the demographics, the ethical aspects, the religious beliefs, the population growth rates. The company can get an idea of the present and future needs of the consumers and know the reasons due to which the consumers are compelled to purchase a product.
4. Technological Factors
The technology plays an important role in the performance and marketing of the company. Internet and e-commerce are important factors which can have a positive impact on company. The technological factors include the ways through which technology can bring positive changes in business. The internet has turned the world into a global village. The customers are getting tech-savvy. So to keep up with the latest trends, the company needs to remain updated with the latest technology. Otherwise, the company will be left behind. There are a number of PEST-based variants which can be used to explore more complex & complicated business situations, with added factors. For more info about the PEST Analysis and other important matters of business education, you just need to visit http://www.businessstudynotes.com/