Examining external factors Mr. Barry Year 12 Business BTEC

What do these have in common? Mr. Barry Year 12 Business BTEC

PEST ANALYSIS This form of business analysis examines the external environment and the global factors that may affect a business. It can provide a quick and visual representation of the external pressures facing a business, and their possible constraints on strategy. It is usually divided into four external influences on a business P – Political E – Economic S – Social T – Technological

PEST ANALYSIS POLITICAL: This is concerned with how political developments, regionally, nationally and internationally might affect a business’s strategy. Employee protection- health/safety, redundancy pay, discrimination, minimum wage Consumer protection- truth in advertising, high-pressure sales tactics, sales agreements Competition protection- unfair trade practices, monoply, mergers & takeovers

Economic growth and rising living standards PEST ANALYSIS ECONOMIC: This involves the analysis of a wide variety of economic factors and their effects on a business. They include: Economic growth and rising living standards Low/high levels of inflation Low/high levels of unemployment Balance of payments (value of imports vs exports)

PEST ANALYSIS SOCIAL - What competitive advantage might a business gain by social changes taking place outside of the business? Aging population, reduced birth rates, longer life expectancy Changing role of women in the workplace Improved Education – better skilled workers Early retirement, more leisure time Rising divorce rates, more “single” households Job security Immigration creating a wider range of consumer tastes

PEST ANALYSIS TECHNOLOGICAL – The impact of technological advancement on business strategy. Business Software applications (word processing, spreadsheets, database, accounting systems, inventory systems) Computer-aided design Computer-aided manufacturing Internet/Intranet

Individual Task Perform a PEST analysis on both: Mr. Barry Year 12 Business BTEC

Businesses need to keep up-to-date with changes such as: Political changes made by government (political) Changes to the law (legal) Changes that take place in society over time (social) This presentation focuses on political factors only Mr. Barry Year 12 Business BTEC

European Union UK Parliament Local Councils Political Factors European Union UK Parliament Local Councils UK is a member of the EU. Decide on what can be done in member states (affects UK). UK Parliament – one party in main power as wins most seats in a General Election. Prime Minister who appoints cabinet ministers to be in charge of key areas such as Education. Recently – Michael Gove has been Education Secretary and he has been very unpopular – too may changes too fast for teachers to keep up with! Change to Nicky Morgan – one year ahead of general election! Political move? Local councils – councillors are elected representatives of their area – make decisions on behalf of local areas. Mr. Barry Year 12 Business BTEC

How Political Factors can affect Businesses Positive: Granting of a subsidy Granting of an exemption from taxes Provide training opportunities Negative: Raise taxes Prevented from carrying out some activities Mr. Barry Year 12 Business BTEC

Membership of International Trading Member of EU means can freely move goods, capital (money) and labour. Britain benefits from foreign workers coming to work in the UK. How might Tesco & Coppice be affected by these International Trading allowances? Mr. Barry Year 12 Business BTEC

Political Stability Political party elected for approx. 5 years. May 2015 General Election Political Parties publish their Manifestos. http://www.bbc.co.uk/news/uk-politics-29642613 Once elected they implement their plan. Businesses can plan based on manifestos. Mr. Barry Year 12 Business BTEC

Who is this? Monopoly man Point of Monopoly is t dominate the board through owning the most and being the most successful/the richest One business dominating is called a ‘monopoly’. Mr. Barry Year 12 Business BTEC

Government support for different organisations Governments support healthy competition Can you name the big 4 supermarkets? Why would the Government encourage their to be more than 1 supermarket (monopoly)? Businesses abusing their position can be taken to court by the Competition Commission & Restrictive Practices Court. Think of the supermarkets – Asda, Tesco, Sainsbury’s & Morrisons Mr. Barry Year 12 Business BTEC

Google ‘switch to save uk’ The choose this link: https://www.gov.uk/government/news/switch-to-save-27-billion-up-for-grabs-by-switching-energy-supplier Read the information provided – make notes on what it is about. Mr. Barry Year 12 Business BTEC

Taxation Taxes are levied by national government & local government. Tax can discourage certain activities such as smoking and drinking. Businesses see tax as reducing their profits. The annual budget in March outlines the governments tax proposals. Mr. Barry Year 12 Business BTEC

Grants & Subsidies A grant is a sum of money the government gives to a business to support particular activity. Grants are given for things such as: Taking on young trainees Employing previously unemployed people Funds to purchase new machinery http://www.education.gov.uk/get-into-teaching/funding/postgraduate-funding Coppice receives sum of money for teachers training ‘on the job’ in shortage subjects such as maths, english, science etc. This encourages us to employ them and increases amount of teachers of that particular subject the UK has who are qualified. Mr. Barry Year 12 Business BTEC

Infrastructure Central infrastructure provided by Government. Builds motorways, roads, railways etc. Also includes systems such as ‘Broadband Britain’ including policies to install internet into all libraries. How would this benefit: Coppice? Tesco or Marks & Spencer? Mr. Barry Year 12 Business BTEC