http://www.marketingteacher.com/lesson-store/lesson-pest.html
In connection with our studying international markets I decided to choose a video that explains how PEST analysis works.
PEST analysis stands for "
Political,
Economic,
Social, and
Technological analysis" and describes a framework of macro-environmental factors used in
strategic management.
PEST analysis is used to concider the features of the market we are breaking into, especially if it is located overseas. PEST analysis includes examination of the following factors:
Political / Legal Factors
The politishians make the laws so there is very close collusion between political and legal factors - it is sometimes difficult to separate them out.
Political factors require analysing the following matters:
- monopolies and mergers rules
It is important to understand from the beginning that if monopolies are present on the market, they not only own the largest market share, but they will definetely look to growing their market share. Example of that could be Tesco - the largest retail company in the UK
- local, national and supra national legislation
To t your business in a foreign country you have to look thoroughly through all the legislation
It's changing all the time. That's why it is important to keep an eye on it. In England, according to the speaker, they have the whole issue of non-dom situations when politishians are interested in making the country more attractive for foreign investors but still are raising taxes.
This involeves the working week - you had better find out how many hours people work a week
- government policy and initiatives
Many goverments are moving towards green initiative and actually are investing a lot in green technology
It varies greatly all around the world. Just in UK recently they have had train strikes and since the strikes are having a great impact on all of the business this point is very important
Economical Factors
- business cycles growth, recession, depresion
Before entering a market we should define the stage of the cycle. We should clearly bear in mind that from one scenario of growth we will go into recession, it is just a question of way and time.
- inflation / interest / exchange rate
These will vary from each country to country and from market to market
It will also have a huge impact on your goods or servises through the level of consumprion
It is one of the most important points because it helps in assessing the potential of the market and also is crucial point in establishing prices
While making such economic review we have to use the exact figures, otherwise it will be a genaral statement without any proof
Sociocultural Factors
- demographics
- diversity
- lifestyle
Who are our customers, what do they live like? Are they going under different lifestyles?
We need to examine if the wealth people are getting wealthier and the poor are getting poorer or we have a middle class emerging into the market.
People make our market, so we have to take this point into consideration
How are we consuming? As a marketing ploy Tesco have recently decided to change 'bogof' conception (buy one, get one free) into 'buy one, get one free later' because a lot of consumer didn't want to buy more than they actually needed.
It becomes hugely important because countries are becoming bigger and bigger because in connection with migration shift. That could have great impact on our particuliar market.
Technological Factors
- new discoveries and innovations
We should make sure that our product is meeting the requirements in that area (the version of our product is the latest on this market)
- the issue of obsolescence
Companies are building their products because they want customers to be able to buy the new ones
Internet is the fabulous environment of where we can access information but the problem is how we access it, when we want it. So you must make a research if consumers on this particular market have access to Internet anytime, anyplace anywhere and if the mobile phones with access to Internet are common.
Among all of the factors mentioned above, the speaker tells that while entering a market we also should pay attention to ethics. We should find out how to become a good citizen of the country we are making budiness in (How much do corporations put in charities?).
It took me 3 times watching the video to catch this information. There still are several words in the speech that I didn' t understand, but the main conception of the video is clear.
