Manning School of Business
Needs changes
Session03:
PEST(EL) Analysis
Dr. Mark H. Mortensen
66.490.211 and 212
Tues &Thurs 2:00 to 3:15
3:30 to 4:45
Mortensen Consulting Group
Today
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Purchased text book & read Chapter 3
Purchased case studies
#2 Gathered info on your group’s company
Attendance
Group workshop on #2 – your company
Discussion on PEST(EL) analysis of external
environment
Group decision - Pick two of the following:
lectures, material discussion, group workshops
Reiterate Assignment #3, due Thursday
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Group Workshop: Your Company
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Take 20 minutes:
 Pull
together your group information about the
company that your group has been assigned
to.
 Fill out the information on the profile sheet
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Present the sheet (via overhead projector)
to the class (3-4 minutes).
Mortensen Consulting Group
Today
1.
2.
3.
4.
5.
Attendance
Group workshop on #2 – your company
Discussion on PEST(EL) analyses of the external
environment
Group decision - Pick two of the following:
lectures, material discussion, group workshops
Reiterate Assignment #3, due Thursday
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Strategic Management Process:
Environmental Scanning
TOOLS
Assumptions
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Constraints
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Truisms
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PEST(EL) analysis
Porter 5-Forces model
Company positioning chart
Product positioning charts
BCG product matrix
GE product matrix
Core competency analysis
Value chain analysis
Bowman’s Strategy Clock
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Environmental Scanning
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Assumptions
Outside-In analysis
 Society
Constraints
 Industry
 Internal
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Truisms
company
Not what you wish
it was, but what it
actually is.
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PEST(EL) Analysis of the External
Environment
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PEST Analysis is a simple but important
and widely-used tool by business
leaders worldwide to build their vision of
the future.
Ensure that what you are doing is
aligned positively with the forces of
change that are affecting our world. By
taking advantage of change, you are
much more likely to be successful than if
your activities oppose it.
Helps avoid taking action that is
condemned to failure for reasons
beyond your control.
Particularly useful when starting to
operate in a new country or region.
Using it helps you break free of
unconscious assumptions, and helps
you quickly adapt to the realities of the
new environment.
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PEST(EL) Analysis
Political
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Form of government
Tax laws
Stability of government
Government attitude toward
foreign companies
Strength of opposition groups
Trade regulations
Protectionist sentiment
Foreign policies
Terrorist activity
Legal System
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PEST(EL) Analysis
Economic
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Economic development
Per capita income
Climate
GDP trends
Monetary and fiscal policies
Unemployment levels
Currency convertibility
Wage levels
Nature of competition
Membership in regional economic
organizations, e.g. EU, NAFTA, ASEAN
Membership in World Trade
Organization
Outsourcing capability
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PEST(EL) Analysis
Example: GDP Country Ranking
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PEST(EL) Analysis
Example: Population and Growth
87 India 1.3%
125 US 0.9%
152 China 0.5%
199 Japan -0.1%
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PEST(EL) Analysis
Example: Other Economic Indicators
http://www.indexmundi.com/g/r.aspx?v=67
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PEST(EL) Analysis
Sociocultural
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Customs, norms, values
Language
Demographics
Life expectancies
Social institutions
Status symbols
Lifestyle
Religious beliefs
Attitudes toward foreigners
Literacy level
Human rights
Environmentalism
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The “Graying of America”
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Baby boomers and retirees over 65
represent the fastest growing
demographic segment of the
population. We have talked about
10,000 Americans turning 50 every
day for years and combined with a
decline in the birth rate, 40% of the
overall U.S. population is over 50.
In 1900, just 3.5 million Americans
were 65 years of age. By 1998, that
number grew to 35 million and
projections are that by 2025 that
number will be 70 million.
And it has been further projected that
by the year 2030, there could be
more Americans over 80 than there
are under the age of eight!
14
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PEST(EL) Analysis
Sociocultural examples
8 Current Transformational Trends
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Expanding seniors market
Impact of the Generation Y boomlet
Increasing environmental awareness
Growing health consciousness
Declining mass market
Changing pace and location of life
Changing household composition
Increasing diversity of workforce &
market
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PEST(EL) Analysis
Technological
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Regulations on technology
transfer
Energy availability & cost
Natural resource availability
Transportation network
Skill level of workforce
Patent-trademark protection
Internet availability
Telecommunications
infrastructure
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PEST(EL) Analysis
Environmental and
Legal
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xxx
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PEST(EL) Form
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Brainstorm the relevant
factors that apply to the
market, using the form.
Identify the information
that applies to these
factors.
Draw conclusions from
this information.
Mortensen Consulting Group
Today
1.
2.
3.
4.
5.
Attendance
Group workshop on #2 – your company
Discussion on PEST(EL) analysis of external
environment
Group decision - Pick two of the following:
lectures, material discussion, group workshops
Reiterate Assignment #3, due Thursday
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Group Workshop: Pick 2
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We do not have time to do all three of the elements in
class:
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Lecture or reading of the chapters to gain a basic understanding
of the concepts.
Discussion of the concepts and how to apply them to the real
world.
Group workshops to practice applying the concepts.
We have time to cover two of the three.
Which two do you want me to cover in class?
The third you will have to do on your own.
Discuss in your groups and then we’ll take a vote. Each
company gets two votes.
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The three options:
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Spoon Feed Approach: Lecture, Discussion, (Workshop)
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Mastery Approach: (Lecture), Discussion, Workshop
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Plus: easiest for you and me; conventional way of teaching
Minus: boring; will not get as much understanding out of the
course; take home exam will be very difficult to do since it
measures mastery
Plus: most interesting and informative for all; take home will be
easier to do since have practiced implementing the tools and
concepts
Minus: More work for me; you will have to read the textbook
Tools Approach: Lecture, (Discussion), Workshop
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Plus: second easiest for me and you
Minus: will be a lot of confusion in the workshops; you will miss a
lot of information and rules of thumb about real-world business
Mortensen Consulting Group
Today
1.
2.
3.
4.
5.
Attendance
Group workshop on #2 – your company
Discussion on PEST(EL) analysis of external
environment
Group decision - Pick two of the following:
lectures, material discussion, group workshops
Reiterate Assignment #3, due Thursday
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Assignment #3: Caffeine Road Trip - Written
report on Starbucks and Dunkin’ Donuts
Due by: Next Tuesday (next week)
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Each person visit both a Starbucks and a Dunkin’ Donuts retail store and
write a report.
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Describe and contrast the atmospheres, types of menu items, service quality,
and prices
 Describe and contrast the patrons and how they react to the above
 Talk to at least one person in the store about why they come there and relate
their opinions
 Describe your own experiences at each of them, from this and other visits.
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Visit the Starbucks and Dunkin’ Donuts web sites:
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Try to determine their target markets, mission statements, and anything else you
can glean about their strategies – write a paragraph or two on each
 Contrast the two web sites
 Contrast the apparent strategies of the two
 Discuss how the information on the web sites does or does not match the reality
in each case.
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A few informal pages should suffice – if it wants to be longer, OK.
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Strategic Management – Spring 2013