1. 1.5 External Environment PEST Analysis

2. 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 business. It can provide a quick and visual representation of the external pressures facing a business, and their possible constraints on strategy. 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 Similar to STEP, STEEPLE, and PESTLE.

3. External Factors that Impact Business Political and Legal Issues  Employment laws  Consumer Protection Laws  Business competition Laws  Political changes (elections?)  Policy changes  Can you think of anything in this category that has currently affected business?

4. External Factors that Impact Business Economic Influences  Economic Growth/Recession  Rising or falling living standards/Inflation  Low or high levels of unemployment  Value of imports/exports-Exchange Rates  Interest Rates/Tax Changes  Can you think of anything in this category that has currently affected business?

5. External Factors that Impact Business Social and Cultural  Population demographics-ageing population  Changing role of women  Improved Education  Retirement/Early Retirement  Divorce/Marital rates  Job (in)security-Underemployed  Immigration (results in changing consumer tastes)  Can you think of anything in this category that has currently affected business?

6. Terms to know:  Recession: 6months of falling GDP (negative growth. GDP is Gross Domestic Product.  Exchange Rate: the value of one currency in terms of another currency.  Cost-Push Inflation: caused by rising costs forcing businesses to increase rates.  Demand Pull Inflation: caused by excess demand in an economy, i.e.: economic boom.

7. External Factors that Impact Business Impact of Technology  Costs (Equipment, labor training)  Labor relations  Data communication  CAD/CAM (computer-aided design/computer-aided manufacturing)  Internet/Intranet  Application programs  Can you think of anything in this category that has currently affected business?