SECTION D
Microenvironment
Factors or elements in an
organization's immediate
area of operations that
affect its performance and
decision making freedom.
These factors include
competitors, customers,
distribution channels,
suppliers, and the general
public.
Microenvironment is what the
company does in relation to
it’s environment.
Macro environment
Factors that influence a company's or
product's development but that are
outside of the company's control. For
example, the macro environment could
include competitors, changes in interest
rates, changes in cultural tastes, or
government regulations.
Macro environment is what is out of the
control of your company.
PEST
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Political: local, national and international
political developments – how will they affect
the organisation and in what way/s?
Economic: what are the main economic
issues – both nationally and internationally –
that might affect the organisation?
Social: what are the developing social trends
that may impact on how the organisation
operates and what will they mean for future
planning?
Technological: changing technology can
impact on competitive advantage very quickly!
Political
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Ethical Constraints (Product/Promotion)
 Is your promotion suitable – will it offend anyone, certain colours
mean different things in different countries
 Is the name of your product translatable?
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Environment (Promotion/Packaging)
 The number of policies concerning the environment has risen
 Has your product been changed to be environmentally friendly
 Have you chosen to use more recyclable material in your
product/packaging?
 Have your thought about the recyclability of your product?
 How energy efficient is your product?
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Grants/Loans for certain products
 Car Scrap Scheme
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War/Conflicts
Political continued...
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Legal Constraints on advertising
 e.g. UK tobacco advertising is banned
 e.g. Food – have to have nutritional content on
packaging, also health campaigners are calling for
restrictions to be placed on fast food adverts as they
are leading to obesity.
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Are they any guidelines that have been set by
the government surrounding your product?
 E.g. Water/Electric Companies cannot raise prices
beyond limits imposed by the government.
 Product Quality
 Health Standards
Research
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http://www.bbc.co.uk/news/politics/
Economic
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UK Credit Crunch/ Recession (Product/Price)
World Recession
Unemployment is rising (Product/Price)
Rise in low cost products (Price)
Economic Recession
Rise in food prices
Cheap advertising at the moment
Interest rates are low = less saving, more spending?
Strength of the £
Unemployment rates are high = less disposable income
(Price)
Job Cuts/Pay freezes/Redundancies (Price)
VAT has risen form17.5% to 20% - luxury items cost more
money! (Price)
To get started remember:
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We’re in a recession
Interest rates are low
 Bank of England set the interest rates
 These rates determine how much interest can
be earned on savings
 Interest rates are low, therefore there is no point
in having savings
 This is a deliberate process to encourage
people to spend their money
 People spend their money, businesses thrive
and we come out of the recession – negative
feedback process
Research
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http://www.bbc.co.uk/news/business/eco
nomy/
Social
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Ageing Population (Product)
Child Care Cuts – Rise in stay at home
mums (Product/Price)
Addicted to smart phones
(Product/Promotion)
Reality TV (Promotion)
Social Gaming (Product/Promotion)
Rise in levels of Obesity (Product)
Rise in on-line shopping (Place)
Celebrities in advertising – New M&S
advert with X Factor Contestants
Research
•http://www.guardian.co.uk/society/social-trends
Technological
Competing technology developments
(Product)
 Consumer buying
mechanisms/technology (Place)
 Global communications (Promotion)
 Technology Legislation
 Technology access, licensing, patents
 Intellectual property issues
 R&D Costs
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Research
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http://www.bbc.co.uk/news/technology/
FYI
This is high level information for top
marks
 Don’t need to much detail but need to
show you have considered the PEST
aspects and realise their importance.
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Examples of PEST
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Growth of China and India as manufacturing
centres
Concern over treatment of workers and the
environment in less developed countries who
may be suppliers
The future direction of the interest rate,
consumer spending, etc.
The changing age structure of the population
The popularity of ‘fads’ like the Atkins Diet
The move towards greater political regulation
of business
The effect of more bureaucracy in the labour
market
References
http://www.businessballs.com/pestanaly
sisfreetemplate.htm
 The Guardian
 BBC News
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