The global environment of today is much different than it was, even ten years ago. Companies used to struggle to get any kind of new information about markets. Even many companies try to take help from Online Certified Translation Services, who provide services like Russian translation services for Sell Sheets. The Industry Expert Translation Services Company helped many companies to know about the foreigner companies and get the details of market in their own language.
Today they are drowning in information to stay floating companies may turn to what is known as a PEST analysis. The term PEST is elaborated as politics, economics, socio-cultural and technological aspects of business environment. In a PEST analysis you audit these factors to gain insights about the company’s environment. PEST analysis helps you to evaluate the larger global environment in which that industry operates. Let’s explore these factors in depth.
Politics:
First political factor refer to Laws, property rights, Patents, political stability and so forth. Laws can drastically impact the nature of the business environment. Consider recent Laws requiring the certain percent of electricity to come from renewable sources. These Laws have increased demand for wind turbines, solar panels, and other renewable energy sources.
In some business environments property rights are poorly protected by governments. Those with political power can seize property with few repercussions and governments may be unlikely to enforce patterns, trademarks and so forth. Times of civil unrest and political stability may make the business environment particularly uncertain and risky.
Economic:
Economic factor refer to market and trade cycles, currency fluctuations, specific industry changes, costumer preferences and country economic growth forecasts. For example, china economy has grown dramatically in recent years and this growth has led to new market opportunities. China’s population represents a massive largely untapped consumer markets for global companies. Today more cars are sold in china then is Europe.
Socio-cultural:
Socio-cultural factor refer to national culture and values, religion language, human rights and population demographics. Socio-cultural is sometimes radically different in different countries firms that compete globally must understand differences among consumers and each country they serve.
To understand it more accurately or clearly you can use Online Documents Translation Services. The Russian Sell Sheets translation services help you to understand all cultural norms necessarily to run a company at a particular place. For example Chinese culture promotes the well-being of the group over the individual which results in the strong norms of open information sharing.
This leads to more wide spread acceptance of product knock offs and software piracy, that you can typically see in western cultures. Understanding local cultures helps companies plan for the unique preferences and practices of local employees and consumers. In some countries night shifts are taboo, in other countries are employers are expected to provide employees with miles of transportation.
In India for example companies often give cash bonuses on wedding anniversaries and dating allowances for unmarried employees, due to the cultural importance of marriage. These are practices that may not be obvious to non-native managers. Demographic trends may also be important because they indicate potential changes in the work force and consumer preferences.
Companies that need highly educated employees for example, may need to pay close attention to local educational trends. Similarly company selling automobiles may carefully consider social trends and transportation. Thailand may look attractive to automakers to the population size, but the increasing focus in the motorcycles may indicate low potential growth rates for automobiles.
Technology:
Technological factor refer to the maturity of manufacturing equipment, information systems, technology platforms in consumer access to technology. Technological advances in some kind countries have led increases in service segment jobs and reduce industrialized jobs. Companies are increasingly turning to sophisticated machinery that requires fewer to produce the same amount of product.
Consider one textile factory in Bangladesh where it is more cost efficient to obtain high tech threading utensils to spend thread then the hundreds of people to do the work by hand. Even with the very low wage rate. Advancement in the information system and technology platforms has also increased the rate of global technology adoption continuous advancement in internet technologies increasingly allows companies to spread common technology across platforms at very low costs.
These common platforms make work less specific to particular companies and countries. Technological advancements have also empowered individuals to compete with large companies. If you need to develop a new website, you can easily find qualified developers, who may live in Manila, Manhattan, Mumbai or even Munich.
Now let’s talk about what PEST analysis does for you:
- It can first spot business opportunities with advanced warning of potential threats.
- Implement appropriate practices for local cultures and avoid problematic practices.
- Break free of old assumption that how managers should run organizations.
For example, Rolls Royce conducted an extensive PEST analysis before it setup operations in Vietnam. Managers believed that Vietnam presented a strong market occasions because of its marvelous economic expansion, increased political freedom, more outward to openness cultural differences and technological advancements. Vietnam’s economy was growing on highest rates than other countries without the same market saturation, such as US, UK and other European markets.
The analysis shows many growth opportunities, it also revealed many threats. For example, bribery was the common practice in Vietnam, but against Rolls Royce company policy in ethical standards. Additionally many Vietnamese were concerned that foreign companies were only coming to make money and send it back to company headquarters without investing in Vietnam.
To avoid this perception Rolls Royce focused on building local skills and sustaining the local natural environment. There are three key steps for a PEST analyses.
- Discover the applicable ecological factors to assess.
- Evaluate that how the relevant factors affect your company’s international operations.
- Develop the appropriate management strategies, appropriate management practices and the appropriate locations for the appropriate employees.
A PEST analysis scans different business environments to understand the long-term trends, and how they might impact a company. You may not be able to change these environmental factors but it is important to understand what they are, so you could take advantages of opportunities, and steer clear effects in the different local environments where you have operations.
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