PEST Analysis

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Political and legal factors –

Those applicable to most businesses (although each business should research each area independently) include taxes, legal requirements for operating the business & relevant product in the UK, EU and other countries applicable. Laws regarding import and exporting - the ECGD provides protection for UK companies investing in overseas trade to limit their risk. Copyright & patent legislation varies from country to country and so the need to be aware of such is imperative.

Technology proves an important contributor to the business with the use of computers and technology to remain competitive and being constantly aware of new technological breakthroughs is essential in order to stay ahead or at least match the competition and remain competitive. An internet presence is crucial to locate untapped markets and open the business to a world-wide audience.

Investigating both the markets you intend to enter as well as researching the external environments are a fundamental part of your business plan, which will ensure you have the right tools and are prepared for most eventualities. An awareness of government and political factors, legal requirements, economic factors, sociological and technological implications within your given business choice and applying them to your business is compliant with the relevant laws as well as being crucial to ensure you remain ahead of the game and constantly aware of what is required of you and where you need to focus most attention.

Understand the environment where your business functions

Macro Environment – PEST for analysis and awareness of the business environment you are operating within—examples include..

Increased interest rates slow business growth. This will affect a business’s profit margin and degree of competitiveness overseas and at home. Exchange rates will also be another influential factor when dealing with foreign fluctuating currencies. Prepayment for goods and trading terms also vary both between countries and industry to industry which can have a huge impact upon cashflow.

The economy of the shipping industry will have an affect upon the industry’s which rely upon it for importing and exporting goods. Another factor is the implications of petrol costs on the consequent shipping costs and how this impacts on your costs. Having an allowance factored into your overall costs would be a recommended move.

This affects the business by the demographics of the customers, geographical location and the attitudes and lifestyle trends which influence the business. Language barriers may also prove problematic when dealing with overseas markets as well as the cultural differences will need to be observed. Trade dealings with overseas businesses should be on equal terms and travelling costs will be expected to be met by the business selling the service.