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PESTLE

External Business Environment
by

philip nash

on 20 September 2016

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Transcript of PESTLE


Fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy
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
Monetary Policy Committee
MPC: Meets the last Thursday of every month to set the base rate of interest
INFLATION

inflation is a rise in the general level of prices of goods and services in an economy over a period of time
The annual rate of inflation shows how much higher or lower prices are compared with the same month a year earlier. It indicates changes to our cost of living

Economists favour low steady inflation of around 2%per annum
Disposable Income and the cost of living


In 1997, when Labour came to power, people were left with 34.5 per cent of their gross income once they had paid taxes, national insurance, mortgage or rent. Now they are left with 32.6 per cent, says a report by uSwitch, a price comparison website.
The Business Organisation
and its External Environment
All businesses are involved in the transformation of inputs (resources) into outputs (goods and services)
Inputs
Outputs
Business Organisations
Conversion by
Processes
The business as a transformation system
Business organisations do not operate in a vacumn
they interact with the outside world
External Environmental Influences
Political, Economic, Social,
Technological, Legal etc.
Inputs
Outputs
Consumption
Business organisation
Feedback
Sources: Worthingon I & Britton C, The Business
Environment 2010
PEST
STEP
STEEPLE
PESTEL
PESTLE
LoNGPEST
Why is it important to monitor the external environment?
What is threatening the businesses?
what is changing?
why is it changing?
where is the change coming from?
who will it affect?
how will the change occur?
when will it happen?

Tools for analysing the external environment
PESTEL
Land
Premises
Materials
Technology
Finance
Management skills

What is missing?
Inputs
Outputs
Goods
Services
Profits
Goodwill



and?
Globalization
Source: www.conservatives.com
Conservative
Government Policy
Government has to 'referee' tax and spending
Source: The Guardian
Gross Domestic Product
Satisfaction of customer
expectations
Capon C, Understanding the Business Environment 2009
The big wide world in which
organisations and sectors operate
The external environment provides the context in which an organization/sector operates
The Systems Model of Business
Key point
What opportunities are out there?
"Change is the law of life and those who look only
to the past or present are certain to miss the future."

—John F. Kennedy
The business can then ask itself....
What is the external environment?
Governments, regardless of their colour (political philosophy), aim to:

Promote business growth
Increase wealth
Improve fairness in society
Provide infrastructure
Invest in public services
Improve the quality of life of their
citizens

To do this Government has to
raise money and spend money


TAX and SPENDING

Summary key points in a business PESTLE
Political and economic objectives of any government
Key areas of economic policy
Taxation
Interest rate setting
Economic growth (GDP)
Inflation
Employment/unemployment
Strength of the pound and exchange rates

The Nation's Bank Account
Adding value
Key policies

£30bn of fiscal consolidation over the next two years, including £12bn a year in welfare cuts.
Deficit reduction
Upgrade transport infrastructure.
Back new “metro mayors”.
Tighten rules on strike ballots.
Deliver faster broadband.
Create a “northern powerhouse”.

Government stability
Economic policy
Taxation Policy
Trade regulations
Geopolitical factors, 'war on terror'

P = Political
The European Question.
500 million people - 27 countries
An interconnected world makes change more rapid and harder to analyse potential impacts
Summer Budget 2015
The Importance of Industry Pressure Groups
Institute of Hospitality
Institute for Travel and Tourism
British Hospitality Association
People 1st
ABTA
Fiscal Policy
Fiscal Policy
Monetary Policy
The UK's economy grew by 2.6% in 2014, the fastest pace since 2007 and up from 1.7% in 2013, official figures have shown.
http://www.bbc.co.uk/news/10613201
China's GDP is 8%
Employment/Unemployment
BBC News economy tracker
www.gov.uk
Why is the rate of interest such an important factor for businesses and individuals?
Business Loan: £25,000 over 10years @ 5% pa
Mortgage: 4-year fixed rate at 2.14% until 31/10/2019
Cost of Living
The current rate of inflation is
0.3%,
the lowest level since records began.
Growth is a positive for business.
Negative growth = recession + negative
Key Point: The overall aim of the bank is to achieve low inflation
Full transcript