1. Examining external factors
Mr. Barry
Year 12 Business BTEC

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

3. 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

4. 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

5. 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)

6. 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

7. 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

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

9. 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

10. 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

11. 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

12. 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

13. Political Stability Political party elected for approx. 5 years.
May 2015 General Election
Political Parties publish their Manifestos.
Once elected they implement their plan.
Businesses can plan based on manifestos.
Mr. Barry
Year 12 Business BTEC

14. 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

15. 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

16. Google ‘switch to save uk’ The choose this link:
Read the information provided – make notes on what it is about.
Mr. Barry
Year 12 Business BTEC

17. 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

18. 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
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

19. 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