PEST ANALYSIS

presentation on PEST ANALYSIS AND ETOPPresented By: Manpreet Singh ( 14MBA 1172 ) Jyoti ( 14MBA 1128 ) Navpreet Kaur ( 14MBA 1190 ) Khusvir Singh ( 14MBA 1138 ) Manpreet Singh ( 14MBA 1173 ) INTRODUCTION An organisations success is influenced by factors operating in its internal and external environment; an organisation can increase its success by adopting strategies which manipulate these factors to its advantage. A successful organisation will not only understand existing factors but also forecast change, so that it can take advantage of change within the environments in which it operates.PEST analysis is used to identify the external forces affecting an organisation .This is a simple analysis of an organisations Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis.

P.E.S.T P for POLITICAL FACTORSE for ECONOMIC FACTORSS for SOCIAL FACTORST for TECHNOLOGICAL FACTORSPOLITICAL FACTORSLegislation such as the minimum wage or anti discrimination laws.Market regulations .Trade agreements, tariffs or restrictions .Tax policies.Type of government regime eg. democratic, dictatorship etc. ECONOMIC FACTORSHome economy situation and trendsOverseas economies and trendsGeneral taxation issuesMarket routes and distribution trendsInterest and exchange ratesInternational trade/monetary issuesSOCIAL FACTORSLifestyle trendsDemographicsConsumer attitudes and opinionsBrand, company, technology imageConsumer buying patternsFashion and role modelsEthnic/religious factorsAdvertising and publicityEthical issuesTECHNOLOGICAL FACTORSCompeting technology developmentAssociated/dependent technologiesReplacement technology/solutionsManufacturing maturity and capacityInformation and communicationsTechnology access, licencing, patentsConsumer buying mechanisms/technology

CASE STUDY MCDONALDS

POLITICAL CHALLENGESHealth and Safety Guidelinesfast food consumption has been shown to increase calorie intake, promote weight gain and elevate risk for diabetescriticised for caloric content, trans fats and portion sizesEcological/environmental issueone of the largest consumers of paper products in the US leading to millions of pounds of food packaging waste littering roadways, clogging landfills and spoiling quality of life.POLITICAL CHALLENGES contdWars and conflicts war between countries where the company operates

ECONOMIC CHALLENGESlow set up costs leading to rapid expansion keeping the prices low for the customers. Requirement of specific raw material. Local market cannot maintain the supply of material thats the reason MacDonald import beef and patato to fullfill its demand.SOCIAL CHALLENGESHealth fears customers now opting for more healthier options like SUBWAY which offers more variety for health conscious customers.

Emphasis on food safety

TECHNOLOGICAL CHALLENGESStreamlining of processes to improve efficiencythrough technology enhancements such as FPI's Help Desk Service, network and application consolidation and other technology implementations, operations of the company are greatly improvedMarketing done by means of television advertisementsImplemented technology to improve supply chain managementSTRATEGIES ADOPTEDMcDonalds changed its image vastly by evaluating the current menu and making changes to it from using organic products to revising the whole menu entirely by offering salads and vegetarian burgers. The accurate and accessible nutrition information help guests make informed menu choices.

STRATEGIES ADOPTEDIncrease presence in Asian countriesWhen the first McDonald's opened in Beijing more than a dozen years ago, 40,000 people lined up to observe a Big Mac. It is growing faster in China than in the United States. It owns & operates more than 600 stores across 105 cities in China. More than 100 more McDonald's stores will be added annually to Chinese cities within the coming years.Locally focused menu choicesIn India McAloo Tikki, Paneer Salsa Wrap, McVeggieIn China - Szechwan-style spicy chicken wings, seafood soup, oriental sauces etc

ENVIRONMENTALTHREAT AND OPPORTUNITY PROFILE (ETOP)WHY ETOP??Helps organization to identify Opportunities-Threats.

To consolidate and strengthen organizations position.

Provides the strategists of which sectors have a favourable impact on the organization.

Organization knows where its stands with respect to its environment.

Helps in formulating appropriate strategy

ETOP ANALYSISEconomic factors:Technological factors:General economic condition.

Rate of inflation.

Interest rate/Exchange rate.

Source of technology.

Technological development.

Impact of technology.

ECONOMIC- higher interest rates may deter investment because it costs more to borrow - a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency- higher interest rates may deter investment because it costs more to borrow - a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency

Technological factors: new technologies create new products and new processes. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products.

Socio cultural factors :Environmental factors:Demographic characteristics.

Social attitudes.

Education level , awareness, and consciousness of rights.Weather change

Climatic change.

Demand related factors.

Suppliers related factors.ETOP ANALYSIS

Social factors. Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff are living longer. It also means some firms such as Asda have started to recruit older employees to tap into this growing labour pool. The ageing population also has impact on demand: for example, demand for sheltered accommodation and medicines has increased whereas demand for toys is falling. Environmental factors: environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.

ETOP ANALYSISPolitical factors :Legal factors :Political system.

Political structure , its goals and stability.

Government policies , degree of interventionPolicies related to licensing , monopolies.

Policies related to export and import.

Policies related to distribution and pricing.

Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

FACTORSCOULD INCLUDEPolitical international trade, taxation policy Economic interest rates, exchange rates, national income, inflation, unemployment, Stock Market Social ageing population, attitudes to work, income distribution Technological innovation, new product development, rate of technological obsolescence Environmental global warming, environmental issues Legal competition law, health and safety, employment law THREAT MATRIXMajorThreats Moderate Threats ModerateThreats MinorThreats HIGHHIGHLOWLOWATTRACTIVENESSPROBABILITY OF OCCURENCEOPPURINITY MATRIXVery attractiveModerately AttractiveModeratelyAttractiveLessAttractiveHIGHHIGHLOWLOWATTRACTIVENESSPROBABILITY OF OCCURENCEPREPARING ETOPDividing the environment in different sector.

Analyzing the impact of each sector on the organization.

Subdividing each environmental sector into sub factor.

Impact of each sub sector on organization in form of a statement.

ETOP: Pros and ConsProsConsHelp to determine the key factor of threats and opportunities.

Good tool to qualify the factors related to companys strategy.

Can consider many factors for each special case.It doesnt show the interaction between the factors.

It cant reflect the dynamic environment.

Case study : MILLIPORE

About Millipore Millipore is a multinational, high technology bioscience company that provides technologies, tools and services for the development and production of new therapeutic drugs. The company, headquartered in U.S.A serves the worldwide life science research, biotechnology and pharmaceutical industries. It has its existence in INDIA since 1967 with the name MERCK and it was asias first to establish pharmaceutical business in the country. Mission and Vision Millipore exists to provide technology, tools and services for the development and production of new therapies and drugs that will enable people to live longer, healthier lives. Our vision is to become the partner of choice for critical tools, technology and services used in the discovery, development and manufacture of new therapeutic compounds. MILLIPORE PRODUCT LINELife science.Drug discovery.Sample preparations.Lab water.Process development.Bio production.Process monitoring.

Millipore is a leading provider of products and services that improve productivity in biopharmaceutical manufacturing and in clinical, analytical and research laboratories. The Company is organized in two operating divisions. Its Bioprocess Division enables pharmaceutical and biotechnology companies to optimize their manufacturing productivity, ensure the quality of drugs, and scale up the production of difficult-to-manufacture biologics. Its Bioscience division helps to optimize laboratory productivity and workflows by providing reagents, kits and other enabling technologies and products for life science research and development. FactorsImpact of each SectorEconomic

Technological

Political

Legal

Socio cultural

Fluctuation in exchange rateIncreasing rate of inflationWorsening economic conditions

Strong R&D programMarket LeadersBetter solution providers

No significant change.

Following FCPA (Foreign corrupt practices act).Strict IPR laws(Intellectual properties rights)

No significance change.

ETOP

OF

MILLIPORE

FactorsImpact of each sectorCompetitive

Demand related

Governmental policies

Competition particularly from low priced products .

Downfall in demand due to low priced products . Containment of rising health-care cost.

No excise duty only vat for product manufactured in India.

ETOP

OF

MILLIPORE

OPPORTUNITY MATRIXMarket leaders brand value and brand awareness.

Provide customized protocol support. Dedicated service team.(Toll Free numbers).

Large installation base. New low budget product lines.

Saturation point of market is far away New markets are opening

THREAT MATRIX Competition particularly from low priced products.Concentration majorly on Big companiess.

IPR laws are not so strong in INDIA. Switching over form process patent to product patent Patent law not well defined

Expensive products. Bad rapport with customers (unsatisfied customer). Lack of geographical division (remote areas). Poor dealer network. Low investment in marketing.

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