The paper 'Strategic Risk Decision Making' is a perfect example of a Management Case Study. A PEST analysis is the scrutiny of the external macro-environment that affects all firms. These are the Political, Economic, Social, and Technological issues (P. E.S. T.) in the external macro-environment. Such external factors are usually beyond the control of the firm and they are sometimes presented as threats. For this reason, some say that "pest" is an appropriate term for these factors. Changes in the external environment can lead to the creation of new opportunities. Pest analysis is also referred to as the STEP, STEEP, or PESTLE analysis (Political, Economic, Socio-cultural, Technological, Legal, and Ethical). PEST analysis is employed in the external analysis when carrying out market research where it gives a certain indication of different macro-environmental aspects that the company must consider (Babette, 2005).
Political aspects include; tax policy, employment laws, environmental considerations, trade restrictions, tariffs, and political stability. The economic factors are the monetary growth, interest rates, exchange rates, and inflation rate. Social factors often focus on the cultural aspects, such as health awareness, population growth rate, age distribution, career attitudes, while emphasizing safety.
Technological aspects include ecological and environmental aspects that determine the barriers to entry, lower efficiency in production level, and influence outsourcing decisions. Research and Development activity, automation, incentives, and rate of change in technology, are normally considered. The internal environment comprises of; staff (or internal customers), office technology, wages, and finance. The microenvironment entails; our external customers, agents and distributors, suppliers, and our competitors. The macro-environment entails; Political and legal, Economic, Socio-cultural, and Technological forces, which are referred to as PEST factors. Most macro-environmental factors are specific to a country.
A PEST analysis is normally performed for the interest of the countries. In a PEST analysis, the following are some of the factors that are considered. Political Factors Carrying out political analysis of the company, the following was found out; In our country, the political arena has a huge influence on the regulation of businesses. The political arena includes government regulations and legal issues under which businesses should operate. The government’ s taxation policies and decisions about the increasing prices chemicals have affected the buying power of the individuals in the U. K. The government is campaigning against the presence of the company at its present site because parts of the local community have been quite vocal with their objection to our continued presence at the site since a small formaldehyde leak from one on-site storage tank about three years ago.
The leak was contained within the tank storage bund. The Government has the mandate to set probable fines for the firms that do not meet their standard law requirements. The local authority would prefer us to relocate the company, they cannot enforce the move through the planning laws as the site carries immunity The government is strongly aware of our company’ s contribution to the area as a major employer. The minister in charge of industries has raised threats of imposing more stringent price control on the industry that before.
This is throwing a lot of investment plans into the misery. The industrial price control organization of the industry in effect has worked contrary to the stated objectives. It has nullified the market forces from the competitive pricing of goods which has been dictated by the market.
At the moment, the determination of pricing is done by the government basing on the agreed costs irrespective of the real cost. Effective January 2012 the country will go for the IPR (Intellectual property rights) regime, popularly known as the Patent Act. This Act will impact the company the most. Thus as far as Formaldehyde production is concerned, it could escape paying a patent fee to the investor of the chemical by manufacturing it using a different chemical route. The company exploited this law and used the reverse engineering route to invest a lot of alternative manufacturing methods.
By so doing a lot of money was saved. This also encouraged competing companies to market their versions of the same chemical. Therefore different brands of the same chemical were truly different. Branding is used as a sign of quality and a purer brand has purer active ingredient and lesser toxic impurities. All these will be eliminated by-product patent regime. Now a patented chemical would be manufactured using the same chemical production procedure and would be manufactured by the investor or his licentiates using the chemicals with the same specifications (Zheng, 2009).
All brands of the chemical containing the same active ingredients would be the same in terms of purity and impurities. The different brands would have to compete based on the non- input related innovations such as packaging, color. This is the biggest change the going to be imposed by the environment on the industry. The marketing effort would now be focalized on the logistics, communications, and economy of operation, extra- ingredients innovations and pricing The political decision as to whether the UK sign up to a single European currency has an effect on the businesses. Our findings show that the political environment of the U. K.
is stable. Issues of extension of the European Union and the war against territories have had an impact on the political stability of the government. As a result of increasing consciousness of the environmental consequences, the U. K Government is planning actions to ensure the chemical industry reflects its environmental impacts. Proposals are emerging on all chemical industry undertakings.
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