PEST And Porter Analysis Of Business
analytical Essay
1134 words
In my research, I was asked to find out why it is best for large organizations to use both PEST and Porter analysis in understanding their particular external environment. I discovered that these tools identify external environmental factors that are subject to change in the marketplace or particular business sector. As the landscape of business changes opportunities or threats emerge and the PEST and Porter analysis tools help exploit, the changes will allow companies to either recognize and adapt or lose to competitors. The outcome of PEST and Porter analysis is decisions based off these models thru recognizance of the overall picture surrounding the company and establishes a gamplan. I will start with PEST analysis, and my perceived use …show more content…
In this essay, the author
- Explains why it is best for large organizations to use both pest and porter analysis in understanding their particular external environment.
- Explains dish's use of pest analysis to continuously assess the market. the technology segment has ushered the potential of a new market with the introduction of the slingtv.
- Analyzes porter's 5 forces analysis to show the competitiveness between suppliers' threats of new market entrants, the bargaining power of buyers, and the threat of substitute products emerging.
- Explains that the macro-level external analysis will give the swot analysis information for understanding and decision-making for dish network leaders.
("Michael porter 's five forces competition theory model," 2016) This analysis shows the power of the customer willing to change from traditional means of TV to the use of the streaming medium as a primary means of entertainment. Also, the use of cellphones increasing its role in everyday life from a communication tool to a full-fledged media hub is making companies like Dish, DirecTV and Comcast realize they have a new market they need to gain a presence in exists and is not faddish or temporary. Over 600,000 subscribers have transitioned to Sling TV and are seeing accelerated subscriber growth as more people trade in their cable boxes for streaming media. According to the A Levy article over 800,000 people left their cable providers last quarter, and the paradigm shift is directly in line with the Porter’s 5 Forces analysis tool by showing the existence of threats of the new market entrants, (Hulu, Sony, etc.) the bargaining power of buyers willing to transition to cost-saving measures for their entertainment leaving Dish and DirecTV. The power of suppliers is there with new devices emerging like the Roku streaming box, Apple TV as well as PS3 's and Xbox 's being platforms to use as for viewing are active and present as …show more content…
Dish 's strength is its ability to deliver on its core competencies of providing high-quality programming at a low cost for its customers. So with this analysis, SlingTV is a product targeted to their customer that decided to leave the traditional satellite market to meet lost and future customer needs. Continuing with the SWOT a weakness or limitations Dish is facing is that they don 't provide internet connectivity and they are currently developing a strategy to enter that market as well as cell phone service to get into the realm of the DirecTV AT&T merger. From a customer perspective, they have to have an Internet provider still, and this presents another separate billing issue instead of the capability of bundling and cost
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- Lacking Growth at Yahoo! Inc.analytical essayEnvironmental scanning is the acquisition and use of information about events, trends and relationships in the organization’s external environment (Choo, 2001). This information can then be used in the planning of future actions for an organization. There are many variables that contribute to environmental scanning, including, natural, societal and task environments (Wheelen & Hunger, 2012). In the case of Yahoo, Inc. the following external factors had major influence in the struggle the company has faced recently: technology advancement, changing pace of life, and competitor analysis.
In this essay, the author
- Explains that yahoo was unable to evaluate what other companies were doing, and how they were becoming successful. yahoo needed external scanning to forecast future market changes.
- Evaluates how yahoo, inc. could have used environmental scanning to improve performance and prevent the decline of the company.
- Analyzes how yahoo reacted to this issue by developing the panama program in 2005, but did not have the draw of social networking to expand on advertising.
- Explains that social networking sites like facebook, google+, and linkedin have created new and constant modes of communication. yahoo struggled to create a streamlined identity and instead invested in wide range of services.
- Analyzes how yahoo has failed to evaluate competitors in a timely manner and determine how these competitors are able to remain successful and increase growth.
- Cites blenko, mankins, and rogers, for their paper, the decision-driven organization, in harvard business review.
- Cites wheelen, t. l. & hunger, j. d. (2012). strategic management and business policy: toward global sustainability.
1089 wordsRead More - PEST Analysis: The Indian Airline Industryexplanatory essayPEST Analysis: The Indian Airline Industry A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector: Political Factors
In this essay, the author
- Explains that a pest analysis is an analysis of the external macro-environment that affects all firms.
- Opines that in india, one can never over-look the political factors which influence every industry in the country.
- Explains that the airline industry is susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers.
- Opines that india's recent political environment has been largely unstable due to international events and continued tension with pakistan.
- Explains that the recent gujarat riots & the government's inability to control the situation have also led to an increase in the instability of the political arena.
- Explains that the events occurring on september 11 had special significance for the airline industry since airplanes were involved. the immediate results were a huge drop in air traffic due to safety & security concerns.
- Explains that international airlines are greatly affected by trade relations that their country has with others. unless governments of the two countries trade with each other, there could be restrictions of flying into particular areas leading to a loss of potential air traffic.
- Explains that the core service of the airlines industry is to transport goods and services to various destinations. as the needs of people increased, the entire system became more organized and formal.
- Explains that the customer needs keep changing, the future is unknown. they may be looking for more frequent inexpensive air travel, something like air taxis, super sonic speed.
- Explains that airlines may set prices above the market price to reflect the image of quality or the unique status of the product.
- Explains that the airline's intention is to charge the average price for the product and emphasize that it represents excellent value for money at this price.
- Explains that people are given very cheap rates only if tickets are booked atleast before the specified time period. the drawback is that a substantial amount of money is not returned.
- Explains that in countries with high corruption levels like india, bribes have to be paid for every permit & license required. state owned airlines suffer the maximum from this problem.
- Explains how business cycles have a wide reaching impact on the airline industry. after the september 11, the world economy plunged into global recession due to the depressed sentiment of consumers.
- Opines that changing travel habits have wide implications for the airline industry. air india needs to focus on their clientele which are mostly low-income clients and their habits.
- Explains that the increasing use of the internet has provided many opportunities to airlines, such as air sahara, and air india.
- Explains that airlines had common services like connecting flights, through check-in, tele check in, food on board, and complementary gifts. freebies are actually win-win deals between airlines and other services.
- Explains that the service providers kept working on new methods to meet the ever-changing customers' demands.
- Explains that air india and indian airlines have slashed their prices to meet the competition of private airlines so that they can consolidate their position in the market.
- Explains that low-cost airlines in the indian aviation industry are trying to woo the customers by providing air travel in exceptionally low prices. low-pricing strategies are made cheaper by booking the tickets long before the flight date.
1922 wordsRead More - The Merger Between Comcast and TWCanalytical essayB) The critical issue is that Comcast, the biggest internet and cable provider in the nation, is seeking to become even bigger in merging with Time Warner Cable, the second biggest company in the market. This merger will increase the influence Comcast has on TV channels and internet content providers, leaving consumers with fewer alternatives and will reduce competition to the amount where Comcast will control two thirds’ of the cable TV market and about 40% of ...
In this essay, the author
- Analyzes how comcast's deal with time warner cable contributes to its negotiating power with the content companies. it will have subscribers for the first time in los angeles and new york city, which could leverage to nbc universal brand.
- Opines that shareholders will approve the merger at the end of 2014, but could be rejected by the federal communications commission (fcc), considering the size of the market share they are getting from the deal.
- Explains that time warner cable and comcast came to a friendly agreement in which the board of directors approved the stock-for-stock transaction.
- Opines that the merger between comcast and twc would create a mega-empire in an industry that is already dominated by big companies.
- Argues that the merger between comcast and time warner cable is more likely to benefit the company, not the consumers.
708 wordsRead More - Pest Analysis Of Appleexplanatory essayIn business, companies are able to control many of the factors that will improve or impair their business strategy, but some factors are beyond their control. These external factors are beyond the company’s ability to control. This external market environment consist of four primary areas: economic environment, technological environment, political and legal environment, and cultural and social environment (Perreault, Cannon, & McCarthy, 2015, p. 62). By performing a PEST Analysis each of these major areas can be explored.
In this essay, the author
- Narrates how a boy, adopted by middle class parents, decided to start his own business on april fool's day.
- Explains that companies can control many of the factors that will improve or impair their business strategy, but some external factors are beyond their control.
- Explains that apple inc. reported that 59% of its revenues were generated outside of the americas region. this factor alone increases the influence of government and legal factors.
- Explains that apple products have a higher price point when compared to their competitors, but consumers will continue to purchase their products even during an economic downturn.
- Explains that the social and cultural environment affects how and why people live and behave as they do. apple continues to develop products that fit perfectly with mobile and global lifestyle.
- Opines that apple products have continued to fair well against its competitors, but their products can be emulated. other companies, desiring to take advantage of the markets created by apple inc., will continue developing products at a lower price and offering improved features.
- Opines that apple continues to dominate their industry by taking every opportunity of all internal and external market factors. however, their success is limited by their next big idea.
- Explains that apple is an industry leader worth an estimated $700 billion employing 115,000 people. apple continues to be profitable and seeks to make the world a better place.
903 wordsRead More - Chess Game Essayexplanatory essay...d to learn from the chess game in terms of the ground rules and specific strategic management points of views. There are three common strategic principles and management expertises that the corporations need to be aware of and follow. First of all, it is highly advisable for them to conduct a macro environment evaluation through resorting to the PESTLE Analysis and the Porter’s Five Forces Model. Second, it is of significance to carry out self evaluation analysis with a view to better understanding the firms’ own advantages and capabilities through using SWOT Analysis. Last but not least, the corporation is advisable to conduct an all rounded competitor analysis in order to gain a detailed acknowledgement of the current circumstance possessed by the major competitors so as to assist them to generate a better corresponding strategies in the future business operation.
In this essay, the author
- Explains the importance of macro environment evaluations and analysis when operating and managing business in a specific market place.
- Explains porter's five forces model as a strategic environment analysis approach for companies to develop competitiveness regarding the specific industry in the host nation.
- Opines that the swot analysis is a feasible choice for companies to conduct evaluations regarding their firms' specific advantages and capabilities.
- Explains that microsoft conducted a marketing analysis portfolio in 2000, which illustrated the weaknesses of the company that refers to the relatively unitary product line.
- Explains that a highly sophisticated chess player is likely to keep an eye on the movements and situation of their competitors.
- Explains that the predatory price strategy is one of the common means for the large scale multinational corporation which has the objective of taking the competitors’ market share.
- Explains that the 21st century has witnessed an increasing social recognition of managing business from a strategic point of view.
- Explains that the business strategy is a chess game in the real-life scenario, which requires advanced and highly sophisticated players to carry out all round evaluations and analysis.
2145 wordsRead More - The PEST Analysis for PC market in U.K.explanatory essayThe PEST Analysis for PC market in UK Changes in interest rates, exchange rates, technology and the law are all external factors, which can affect a firm. These factors can affect the firms’ costs or the market as a whole. Changes that take place in the external environment can be evaluated and analysed by using a PEST analysis. To analyse the firms’ external environment, the following headings are used; Political, Economical, Social, and Technological. A PEST analysis has been used to analyse our firm in the PC market, 2.2.1 Political The change in government policy will have a big impact on the PC market; for example, recent proposals to extend membership of the EU will lead easier access into the market for UK firms.
In this essay, the author
- Explains that changes in interest rates, exchange rate, technology, and the law are external factors that can affect a firm's costs or the market.
- Explains that the change in government policy will have a big impact on the pc market. recent proposals to extend membership of the eu will lead to easier access into the market for uk firms.
- Explains that the minimum wage has gone up from £3.50 to £4.10 and trade unions say it should be raised by another 10p but it needs to be higher than what it is now.
- Explains the economic factors that need to be considered when analysing the external environment of a firm of market include, interest rates, exchange rates and inflation.
- Explains that if the government put up interest rates, consumers would spend less and invest their money in banks and building societies.
- Explains that exchange rates will affect our firm the most as we will be purchasing imported computers and selling our computers aboard.
- Explains that if the government raised corporation tax, it would also affect their firm, since they are exporting their good to them.
- Explains that the pest analysis deals with the social factors affecting the external environment of the pc market.
- Analyzes how technological development affects the external environment of the pc market. the development of technology has created substitutes for pcs.
- Opines that the firm could differentiate its product to attract more consumers to its firm because it is different from competitors.
1958 wordsRead More - PESTLE Analysis Approach To The Oil And Gas Industryanalytical essayThe deep analysis of the macro-environment is key to the organisations in order to understand which factors are impacting their operations. The main purpose of PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental) is to identify those factors that have an impact on the organisation but are outside its control area. Together with other frameworks (such as Porter’s ‘5 forces’), PESTLE framework is required to develop a comprehensive analytical strategic process.
In this essay, the author
- Explains that ideologies are a big player in the social environment where the downstream consumer's perception of fossil fuels may generate larger demand for cleaner energy.
- Explains that the environment is a very important aspect around any business. legislators are increasingly concerned with reducing organisations’ carbon footprint and its environmental impact.
- Explains shell's pestle analysis approach to identify uncertainties in its far environment. the deep analysis of the macro-environment is key to understand which factors are impacting operations.
- Explains that countries may be subjected to geopolitical fights and political instability due to the presence of natural resources. organizations like opec and gefc are dedicated to improve the coordination in the policies of their members.
- Explains that economic crisis has a major impact on supply chain, dysregulation of consumption and demand of resources, and economic interests are also key points for the country where the resources are distributed.
- Explains that technology is innovation and could change the organisation's strengths. corporates must invest in r&d to maintain a competitive advantage.
- Analyzes how pestle analysis uncovers major factors that provide threat and opportunities to the organisation and how these factors are closely related.
729 wordsRead More - PESTLE Analysis of aSports Clubexplanatory essayTechnological change, change in economic climate, natural occurrences and such-like are matters that concern the macro-environment of a business. These external, uncontrollable, influences can and will impact hugely on the success or failure of a business. One of the tools that are applicable in considering these factors is PESTLE. Political; Environmental; Social; Technological; Legal and Economic considerations will need to be engaged in order to prepare the business for macro-environmental influences. For this reason, PESTLE will be the most appropriate tool to use to identify and outline the main macro-environmental factors that may affect my business.
In this essay, the author
- Explains that political factors that may impact on the business, as a sports club, would mainly include transportation.
- Explains that transport is a political factor as it is controlled and affected by legislation. the price of transportation will also affect the mode of transport that these groups of people may use.
- Explains that the power of the supplier is very small for a small segment of business i.e. the merchandise/food and drink.
- Explains that the power of the buyer in the case of this business is huge. the number of customers has a major affect on the business and success is price sensitive.
- Explains that the threat of competitive rivalry has been outlined and explained. the substitutes would fall under the same category as rivals.
- Argues that the threat of new entry is small as customers will based their decision around team loyalty and locality to stadiums.
- Explains that the most suitable target market for the business would be families, who are likely to respond and adapt in a positive way.
- Opines that a business should focus on the 16-24-age bracket, as they are more likely to spend money on healthy living, despite their low annual income.
- Explains the impact of the recession on consumers' leisure habits.
- Opines that consumer spending is on the rise, citing mintel.
- Explains that halfords reports boost in q2 revenue.
- Explains that family ties are key for children's sport.
- Explains that teen athletes are more likely to drink and less to use drugs.
- Explains that 91.4% of trains on time in january 2012.
- Explains that it is important to recognise the main features that affect a business in view of the macro and micro-environmental factors.
- Describes the environmental factors that may impact on the business, such as weather and fuel.
- Explains how the media portrays basketball or sport in general, and the amount of tourism occurring in the surrounding areas may affect the business.
- Opines that technological factors that may impact on the business would include the impact of newly invented sports equipment, advances in mobile phone applications, and ease of internet access.
- Opines that the worcester royals are less likely to experience this type of legal problem than a professional league team.
- Explains the economic factors that may impact on the business would include the general economic state, taxation, expendable income, and other factors.
- Explains that there are only 12 professional/semi-professional basketball teams in the british league, so there is little competition. the business would have to spend a lot of money on advertising to attract custom away from these sports.
- Explains the importance of creating goals for a business to achieve, such as increasing the turnout and revenue for games by 10% (up to 70% capacity utilization) within the next 2 years.
- Explains that the business would take on a part functional structure for its organisation. this will allow greater efficiency, as specialists will be working in their particular area.
1987 wordsRead More - Michael E. Porter's Five Forces In Pepsiexplanatory essayPorter has identified five competitive forces that shape every industry and every market. These forces determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.
In this essay, the author
- Explains that suppliers include all sources of inputs that are needed to provide goods or services.
- Opines that the market is dominated by a few large suppliers rather than fragmented sources of supply.
- Explains that there is the possibility of the supplier integrating forwards in order to obtain higher prices and margins.
- Explains that the buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products).
- Explains that the buying industry faces a high pressure on margins from their suppliers, which can potentially reduce strategic options for the organization.
- Explains that the bargaining power of customers determines how much customers can impose pressure on margins and volumes.
- Explains that switching to an alternative product is relatively simple and is not related to high costs.
- Explains the cost advantages of existing players due to experience curve effects of operation with fully depreciated assets.
- Describes the force of competition between existing players (companies) in an industry. high competitive pressure results in pressure on prices, margins, and hence, profitability for every single company.
- Opines that they need to be ahead of their competition in terms of flavors and looks.
- Explains substitute products limit the potential returns of an industry by placing a ceiling on the prices firms in the industry can profitably charge.
- Explains porter's model of the five competitive forces, based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. porter identified five competitive forces that shape every industry and every market.
- Opines that competition in an industry will be higher, the easier it is for other companies to enter this industry. new entrants could change major determinants of the market environment.
- Explains the threat of substitutes if there are alternative products with lower prices and better performance parameters for the same purpose. they could potentially attract a significant proportion of market volume and thus reduce sales volume for existing players.
- Explains that there is not much differentiation between players and their products, hence, price competition. low market growth rates are possible only at the expense of a competitor.
- Predicts that the beverage industry will grow despite sluggish carbonated soft drink trends in the united states.
- Explains that corporations are mutually dependent, and a move by one firm can have an effect on its competitors. newcomers to an industry bring new capacity and desire to gain market share.
- Explains that pepsi is planning to come out with a new, rived look this summer. 2. economies of scale - the larger the companies, the more chances they have.
1756 wordsRead More - Macro-Environmental Analysisanalytical essayIn analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The "radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization" (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).
In this essay, the author
- Explains that analyzing the macro-environment involves identifying factors that might affect vital variables that influence the organization's supply and demand levels and its costs.
- Explains kotler's claim that pest analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.
- Analyzes how economic conditions affect how easy or difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand.
- Explains that economic conditions are influenced by political and government policy, being a major influence affecting government decisions.
- Explains that economic conditions and government policy influence a number of environmental forces that can affect organizations. capital markets determine the conditions for alternative types of funding.
- Explains that the labour market reflects the availability of particular skills at national and regional levels. training is influenced by government and other regional agencies.
- Explains that the sociocultural environment encapsulates demand and tastes, which vary with fashion and disposable income, and general changes can again provide both opportunities and threats for particular companies.
- Explains that technology is widely recognized as part of the organization and the industry as it is used for the creation of competitive advantage. technological breakthroughs can create new industries which might prove a threat to existing organizations.
1056 wordsRead More