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Unit 2 - External Environment

Business Studies Grade 10
by

Stephanie Seehaus

on 10 September 2014

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Transcript of Unit 2 - External Environment

Unit 2 - External Environment
SWOT Analysis
SWOT - Why?
Formal Report
•Cover page & Table of Contents
•Executive summary (abstract)
•Introduction
•Main body (PEST & SWOT)
•Conclusions
•Recommendations (solutions to opportunities & threats)
•Bibliography
•Appendices (supporting documents)
PEST/PESTLE Analysis
•PEST: a way to analyse external environment’s impact on business
–Political
–Economic
–Sociological
–Technological

•Green

–PESTLE
•Legal
•Ethical
Strenght
•Strengths
–Can be anything favorable for the business.
–Think of a business and try to list as many strengths as you can.
Weaknesses
•Weaknesses
•Require attention and honest/realistic assessment
•Negative effects may be minimised through strategic action.
•Could include things done badly or things done better by competition
•Add some weaknesses to your list
Political
•Environmental protection/legislation
•Consumer protection
•Government’s attitude
•Competition regulation
•Advertising standards
Economic
•Economic growth
•Recession
•Monetary Policy
•Exchange Rate
•Fiscal Policy (tax & government spending)
•Unemployment
•Inflation
–Demand Pull
–Cost Push
Social
•Income distribution
•Demographics
•Labour & Social mobility
•Lifestyle changes
•Attitudes to work and leisure
•Education
•Fashion and Fads
•Health & Welfare
•Living conditions
Technological
•Changes in physical sciences
•Internet
•Energy use and costs
•Rates of technological obsolescence
•New discoveries
•Government and Industry focus on tech
•Government spending on research
Legal
•Employment law
•Health and Safety
•Taxation
–corporate and consumer
•Other regulations
•International trade barriers
•Strength of the rule of law
Environmental
How people’s perception and reaction to environmental issues can affect a business
Ethical
•Demands to meet & adopt specified codes of conduct.
•Ethics has begun to play vital role in overall strategy.
•Increasing role taken by pressure groups or community organisations.
•Increasing demands for social and environmental responsibility.
•Media in turn tends to be vehicle by which pressure groups influence business strategy.
Opportunities
•Opportunities
•Factors that provide growth potential.
•List as many as you can...
INTERNAL
EXTERNAL
Threats
•Threats
•Factors with potential harmful effects on business.
•Barriers to development.
•Issues that the organisation must protect itself from.
SWOT - Why?
•Uses its strengths to take advantage of its opportunities.








•Minimises its weaknesses to reduce the significance of the threats.
TASK
• In pairs you will be given
a company to prepare a
PESTLE analysis for.

• Both pairings and the task
will be decided randomly!
• The first job is to research some
issues and background about the
company.
• Where am I going to get this info?
• This will require a bit of thought
and subtlety on your part. You
must go beyond the obvious!
• Brainstorm the PESTLE
with your partner.
• Work out how you are
going to present this
information.
• Remember it is not
enough to identify the
factor, you must say why
it is where it is.
Write a short piece explaining how the firm
should exploit/avoid some of the issues
you have identified.
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability.
PEST

• LO1: Prepare a PEST analysis for a given situation and use it to
analyse the impact of the external environment on a firm.

– Political
– Economic
– Sociological
– Technological
• It’s a way of working out what is going on ‘out there’ so you can then
respond to it.

• LO2: Evaluate the impact on a firm’s objectives and strategy of a
change in any of the PEST/PESTLE factors.
Full transcript