PESTLE Analysis
A PESTLE analysis for Mydin must consider all the important external factors impacting on the company. These factors may have political, economic, social and culture, technological, legal or environmental dimensions. These forces, although out of the company’s control, may have an impact on the success of any future plans. By considering them, a company can change direction, build contingencies, identify new opportunities or do nothing at all. It is an important part in the strategic decision making.
Political analysis
The political analysis must include the impact of local and national government, and the international situation. The Economic analysis needs to investigate the influences of the stock market and
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Current trend indicate that customers have moved towards ‘one-stop' and ‘bulk' shopping, which is due to a variety of social changes. Mydin have, therefore, increased the amount of non-food items available for sale. Demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation mean that Mydin are also focusing on added-value products and services.
In addition, the focus is now towards; the own-label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. National retailers are increasingly reticent to take on new suppliers (Clarke, Bennison and Guy, 1994; Datamonitor Report, 2003). The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. One example of Mydin adapting its product mix is to accommodate an increased demand for organic products.
Technological factors
Technological factors are usually easier to spot, because new technologies involve change, and change is always noticed. For instance, online shopping has had a major impact on Mydin's recent success. Conversely, The change created by technological advances often lead to legal problems, which is why legal analysis is always an important part of a PESTLE analysis.
Legislative factors
Various
tax changes, new laws and government policy changes. Managers should not just rely on the PESTLE analysis, it is a tool, a snapshot in time, which will assist in understanding the current factors, it will not determine a direct path in the direction they need to follow to progress the company considerably. When in fact managers most need to judge, into what factors are most likely to change and also which have the greatest impact to them, so in the case of Centre Parc’s they need to consider mostly economical and sociological. A way of achieving the relevance of each factor to the company is to rank or score the factors, so there is a clear understanding of which are of most importance and vice versa. As Centre Parc’s has many different villages, this means that it includes many divisions and also brands (Starbucks, and Zilli restaurants), so managers need to concentrate on one specific area within each village.
The use of PEST analysis can be seen effective for business such as their strategic planning, marketing, and product development. Furthermore, PEST ensures that company`s performance is aligned positively with the powerful forces of change that are affecting business environment (Porter, 1985). PEST have four factors which are Political, Economic, Social, and Technological. However, we use these factors to check how they interplay to the business or the activity of an organization.Using PEST analysis is important when a company decided to enter its business operation into new markets and new countries. In this case, using PEST will help to adapt effectively to the realities of the new environment and to make contingency plans for threats by preparing business and strategic plans (Byars, 1991; Cooper, 2000).
The PEST analysis helps to explain the critical factors in the organization's external environment. The factors include political, economic, social and technological. For Myer, these forces combine with the internal factors, and other external factors like competition. The Australian consumer goods retail market is worth $121 billion (IBISWorld, 2012) but is heavily fragmented. Myer is the third-largest company in the industry behind David Jones and Harvey Norman, but with $3.158 billion in sales holds just 2.6% market share (Myer 2011 Annual Report). This implies that competition is only one of many factors that can contribute to the company's results. This PEST analysis will help to identify the other major factors.
If we want to analyse the political factors which impact upon the company we need to make a general view of the situation in the country. What are its law and requirements?
Compare and contrast macro political risk with micro political risk. Discuss policies to combat their impacts on international business activities.
Stores are also competing in other forms in order to secure loyal customers. Some of the forms are product range and quality by which stores are offering privately-labeled products that are primarily used in the commodity lines at lower prices.(Australian Government, Department of Agriculture) This has caused a significant shift in the industry, thus allowing players like ALDI who started with a private labeled product early on to gain and improve its market share. Another major form is convenience where several non-price factors such as opening hours, strategic locations, parking area, distribution options (delivery or in-store pickup) and online shopping comes into play. (Australian Government, Department of Agriculture)
PESTEL analysis is widely used to better understand the external environment of the company. The acronym PESTEL stands for political, economic, sociocultural, technological, environmental, and legal factors. PESTEL analysis helps managers better understand the threats and opportunities a company faces.
The PESTLE Analysis identifies five main categories influencing any organisation and those are as follows:-
Macro environment is crucial to the development of a company. All the external factors can have huge positive or negative influences on Travis Perkins plc, therefore a better understanding of the environment of the company is of supreme significance (Peng & Nunes, 2007). Among all the analysis tools, PEST analysis is one of the most effective tools to analyze the external environment of a company (Riley, 2012). This part will demonstrate PESTLE analysis of Travis Perkins plc below. The result of PESTLE analysis can be demonstrated in the following table 1.
The PESTLE analysis tool is one of many used to help managers identify their market positioning and provide managers insight on potential threats and opportunities that the business could face giving the business a potential advantage and competitive advantage over competitors.
When it comes to political factors, the government stability, taxation policy, social welfare policies and trae regulations shoule be considered.
External analysis of general environment will be done using PESTEL which refers to how the political, economic, social, technological, environmental and legal environment affects an organization. Below will be a diagram of PESTEL, followed by a brief explanation of each factor and their examples.
PESTEL analysis is a method used to study macroeconomics - the macroeconomic environment of an enterprise. Otherwise, it is called the general segmentation of the environment. It defines the basic spheres of the environment, which are areas that have a crucial impact on the functioning of the organization. Also marks the future strategy of the organization through an in-depth analysis.
PESTEL analysis is to identify and analyze the strategy and business environment, it is stand for Political, Economic, Social, Technological, Legal, and Environmental factors. This model is to assessing the current environment and potential changes. If