Impact of economic environment in business with example

Welfare state procedures which includes security, education, pensions and health Protection of career and legislation of working conditions Example: ON attempted to type in the Spanish market in Feb by offering sensitive to Endesa largest Spanish energy organization however the GasNatural local organization also exhibited interest for Endesa.

Impact of economic environment in business with example

Recent political and economic developments and associated changes in the practice and delivery of health and social care have led managers and professionals to recognise the importance and links between problem solving and decision-making skills.

In particular, assessing the impact of political, economic, socio-cultural, environmental and other external influences upon health care policy, proposals and organisational programmes is becoming a recognisable stage of health service strategic development and planning mechanisms.

Undertaking this form of strategic analysis therefore is to diagnose the key issues that the organisation needs to address. By understanding your environment, you can take advantage of the opportunities and minimise the threats. The term PEST has been used regularly in the last 20 years and its true history is difficult to establish.

Economic, Technical, Political, and Social. Over the years this has become known as PEST with the additional letters are: Ecological factors, Legislative requirements, and Industry analysis Aguilar, The external environment of an organisation, partnership, community etc.

The same checklist can also be applied inside an organisation. Initially the acronym PEST was devised, which stands for: Political factors - both big and small 'p' political forces and influences that may affect the performance of, or the options open to the organisation Economic influences - the nature of the competition faced by the organisation or its services, and financial resources available within the economy Sociological trends - demographic changes, trends in the way people live, work, and think Technological innovations - new approaches to doing new and old things, and tackling new and old problems; these do not necessarily involve technical equipment - they can be novel ways of thinking or of organising The expanded PESTELI, also includes: Ecological factors - definition of the wider ecological system of which the organisation is a part and consideration of how the organisation interacts with it Legislative requirements - originally included under 'political', relevant legislation now requires a heading of its own Industry analysis - a review of the attractiveness of the industry of which the organisation forms a part.

Organisations that do analyses regularly and systematically often spot trends before others thus providing competitive advantage.

The impact of the economic environment on business

Advantages and disadvantages of using a PEST ELI analysis Advantages Facilitates an understanding of the wider business environment Encourages the development of external and strategic thinking Can enable an organisation to anticipate future business threats and take action to avoid or minimise their impact Can enable an organisation to spot business opportunities and exploit them fully By taking advantage of change, you are much more likely to be successful than if your activities oppose it Avoids taking action that is doomed to failure from the outset, for reasons beyond your control.

Who should undertake the analysis? Decision-making is more natural to certain personalities, so these people should focus more on improving the quality of their decisions. People that are less natural decision-makers are often able to make quality assessments, but then they need to be more decisive in acting upon the assessments made.

PESTELI is a good exercise for marketing people, and is good for encouraging a business development, market orientated outlook among all staff. If you want to use PESTELI with staff who are not naturally externally focused you can have them do some research and preparation in advance of the exercise.

It all depends how thorough you need to be. It is a good subject for workshop sessions, as undertaking this activity with only one perspective i. For most situations the original PEST analysis model arguably covers all of the 'additional' factors within the original four main sections.

For example, Ecological or Environmental factors can be positioned under any or all of the four main PEST headings, depending on their effect.

Legislative factors would normally be covered under the Political heading since they will generally be politically motivated. Demographics usually are an aspect of the larger Social issue. Industry Analysis is effectively covered under the Economic heading.

Thus we can often see these 'additional' factors as 'sub-items' or perspectives within the four main sections. Examples of these have been added to Table 1. Keeping to four fundamental perspectives also imposes a discipline of considering strategic context and effect.

Many of these potential 'additional' factors ethical, legislative, environmental for example will commonly be contributory causes which act on one or some of the main four headings, rather than be big strategic factors in their own right.

The shape and simplicity of a four-part model is also somehow more strategically appealing and easier to manipulate and convey. The prompts are examples of discussion points, and obviously can be altered depending on the subject of the PEST ELI analysis, and how you want to use it.

The following factors may help as a starting point for brainstorming but make sure you include other factors that may be appropriate to your situation: Identify appropriate sources of information.

Impact of economic environment in business with example

Gather the information - it is useful to use a template as the basis for exploring the factors and recording the information.Global Factors and Strategy. Businesses are affected by an external environment as much as they are affected by the competitors.

Global factors influencing business are legal, political, social, technological and economic. In the environmental proper coupling subproblem the world’s economic system is improperly coupled to the environment. Environmental impact from economic system growth has exceeded the capacity of the environment to recycle that impact.

What environmental factors affect business? The ageing population also has impact on demand: For example, demand for sheltered accommodation and medicines has increased whereas demand for toys.

3 Business and the Economic Environment Level 3 Unit 21 1 Understand the impact on businesses of changes in the economic environment 2 D1 Know how government. The economic environment consists of external factors in a business market and the broader economy that can influence a business.

You can divide the economic environment into the microeconomic environment, which affects business decision making - such as individual actions of firms and consumers - and the macroeconomic environment, which affects an entire economy and all of its participants.

The practice of measuring the socio-economic impact of business is still in its early stages, but if integrated into business performance management and used as a tool for effective collaboration.

6 factors shaping the global economy in | World Economic Forum