pest
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PEST FACTORS & IMPACT ON INTERNATIONAL BUSINESS
GROUP MEMBERS :-
NAINA CHAUDHARI (6)
RINKU CHAUHAN (7) KIRAN DANKE (8) ADITI DESAI (9) PRIYANKA DHANVEKAR
(10)
Definition Of International Business –
“The economic system of exchanging good and services, conducted between individuals and businesses in multiple countries.”
PEST ANALYSISP - Political changes
E - Economic changes
S - Socio - Cultural changes
T - Technological changes
IMPORTANCE OF PEST ANALYSISWhile entering in new business
Helps to break free of unconscious assumptions
Help to effectively adapt to the realities of the new environment
KOTLER’S VIEW ON PEST ANALYSIS
a useful strategic tool framework for reviewing a situationapplied by companies to review a strategic
directionseffective for business and strategic
planning, marketing planning, business and product development and research reports.
PEST analysis is also known as: STEP, PESTEL, PESTLE, PESTE, PESTLIED,
SLEPT, STEEPLE, STEEPLED, LE PEST C and LEPEST analysis.
SOURCES FOR PEST ANALYSISNewspapers, periodicals, current books
Trade organizations
Government agencies
Industry analysts
Financial analysts
POLITICAL ANALYSISCASE OF MCDONALD’SMcDonald’s established in California
during the 1940s Aggressive plan to expand in all
other cities of Pakistan Franchises owned by Lakson Group
of Companies in PakistanIn Pakistan- consumer protection
laws are not very strong In countries like US, where the
consumer protection laws are very strong
SONY Government laws for minimum wage Less profit unless they increase prices of
items.
CASE OF ENRON An American energy company based in
Houston, Texas.In 1992, the Dabhol power plant near
BombaySupply 2,000 megawatts of electricity Decentralized government control over
industrial licensing opened the country more to foreign
investment. Failed due to endless disputes over prices
and terms of the deal
ICI PAINTS(Bekshire, UK) :World’s largest manufacturing of paints
and industrial coatings.In 1965 ICI UK acquired a 50% in
“Fullers Paints Pakistan Ltd” Government has imposed 15% sales tax
and heavy duties on imports and raw materials.
As ICI import 75% of its raw materials.Profit margin have decreased.
ECONOMIC FACTORSBusinesses are affected nationally and
globallyAffect consumer confidence and behaviourImpact upon the nature of the competition
faced by the business.Affect the purchasing power of potential
customers
ECONOMIC FACTORS• Economic growth
• Interest rates
• Inflation rate
• Budget allocation
• The level of inflation
EFFECT OF INTERNATIONAL BUSINESS ON INDIAN ECONOMYEntry of MNCs in India
Reason :-new economic policy by government of
India in July 1991incentives to the foreign investors
Now the question is how the MNCs are affecting Indian economy whether they are useful for our economy or not ?
MNC’s AND INDIAN INDUSTRIES: Economists view – MNCs are helpful for Indian industrial sectorNew technique of production management
techniquesIncrease competition in the industrial
sectorDemand for skilled personsInflow of Foreign capital
SOFTWARE SECTOR
TCS , Infosys have controlled salary escalations, resulting in Wipro, Satyam, HCL to follow suit
Difficult for them to remain the price settersUnder pressure to match salaries with those
offered by MNCsMNC’S are increasingly recruiting employees
BISLERI’S EXPANSION IN EUROPERamesh Chauhan owned brand, Bisleri, is
set to sell sparkling water in Europe and US.
Scope for BISLERI in the fieldCompensate the deterioration of imageSilence the critics and increase the faith of
the customer International brand image Witness a major tussle between Bisleri and
Coca-Cola's Kinley
“The fact that we have reached out to international markets is an acknowledgement of our quality and our penchant for safety and purity”
- Ramesh Chauhan
INFLATIONIn Asia, Vietnam becomes the country
suffered most from inflation.
Struggle for their lives every day, unemployment rate goes higher, and many companies and factories have to shut down because of inflation.
CEMENT COMPANIES AFFECTED
Higher input costs, low market valuations and scaled up capacity amidst reduced demand
Growth rate is projected to drop below 10 % for the current fiscal
High inflation and home loan rates have slowed down the growth trajectory of the real estate sector
INCREASE IN SPANISH INVESTMENTS The Spanish investments in india rose five
times to $158 million in last yearOver ten leading companies entered the
countryMany Spanish companies are present in
sectors like infrastructure, insurance, auto components and ports and more are keen to enter the market as India’s economy is quite promising
Invest in Spain is a government agency for promotion and attraction of foreign investments in Spain.
Spanish investment - $158 mn increased by 500% from the previous year
Investing in the automotive and infrastructure segments in India
Indian corporate like Infosys, Tata Consultancy Services, ICICI Bank, Essar Group, Navneet Publications, X L Telecom & Energy, Tata Motors and Kingfisher Airlines met Spanish delegates.
BUDGET 2009: RETAIL SECTOR DISAPPOINTEDBudget had not mention FDI or industry
status for retail
Plans for increasing expenditure in infrastructure under various programes, besides hiking the income tax ceiling, will increase consumption
Abolition of FBT and hike in allocation for rural and urban areas will lead to boost in demand.
PROVIDE STIMULUS TO REAL ESTATE SECTORIndian economy as a whole has largely
been insulated against the global economic slowdown
The Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector
Need for the Government to provide a stimulus for the industry to revive this ailing spectrum of sectors
SOCIO-CULTURAL ANALYSIS
MCDONALD AND HINDU CULTUREMcDonald’s is the world’s largest user of
beef “Maharaja Mac” – which is made form mutton. “McAloo Tikki Burger”, which is
made from chicken.Found beef extract in the oil. Close McDonald’s 27 stores in the country.
PROCTER & GAMBLE’S CASE: Camay soap. Diapers.COCO COLA: Labeled “No- alcohol” on their bottles supplied
to the Gulf countries. NOKIA:Introduced Hindi SMS
for Indian users.
TECHNOLOGICAL FACTORSMajor impact on the business
Affects business prospects, cuts down the profits and forces the management to change the course of the business operations
Change in technology changes the work cultures, the methods and the systems
Technological environment consists of:-
State of domestic or indigenous technology
Facilities for Research and Development
Technical Collaborations etc
IMPORTANCE OFTECHNOLOGICAL ENVIRONMENT Non- replacement of new technology
affects the survival and growth prospects Advances helps to improve quality of
product, increase output and reduce the cost of production
Latest technology enhance marketability of products and face competition
iPHONE
Apple deserved kudos for coming up with a product idea like the iPhone and also implementing it successfully
Aggressive entry into the mobile phone market and had managed to attract the attention of the existing competitors
AIRLINE INDUSTRYIncreasing use of the Internet has provided
many opportunities to airlinesLong-term effort to promote Indian aviation
infrastructureThe Authority is developing modern
communication, navigation, surveillance, and air traffic management systems for India's aviation sector that will help the country meet the expected growth and demand for air passenger and cargo service over the next decade
Helps in attracting investments in improving the infrastructure and services
Microsoft's operating system Vista most recent generation released worldwide on January 30, 2007
Vista was aimed to improve the security of the most widely used PC operating system in the world
Reasons for Failure:- - securities features were not much better
than the previous versions of Windows - came with its own list of hardware
requirements - Vista ran slower on PCs than XPPrevented Vista from taking over from its
predecessors
FAILURE OF HD-DVDHD-DVD group was holding a press
conference, Warner Bros withdrawing its support for HD-DVD
Exclusively supporting backing rival format Blu-ray
There were several factors that led to HD-DVD format lose out to Blu-ray
Most commonly cited explanation is that Sony did a better job convincing major film studios