session03: pest(el) analysis

Session03:PEST(EL) Analysis

Dr. Mark H. Mortensen66.490.211 and 212Tues &Thurs 2:00 to 3:15

3:30 to 4:45

Manning School of Business

Needs changes

Mortensen Consulting Group

Today1. Attendance2. Group workshop on #2 – your company3. Discussion on PEST(EL) analysis of external

environment4. Group decision - Pick two of the following:

lectures, material discussion, group workshops5. Reiterate Assignment #3, due Thursday

Purchased text book & read Chapter 3Purchased case studies#2 Gathered info on your group’s company


Group Workshop: Your Company

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 Present the sheet (via overhead projector)

to the class (3-4 minutes).


Today1. Attendance2. Group workshop on #2 – your company3. Discussion on PEST(EL) analyses of the external




Strategic Management Process: Environmental Scanning

Assumptions

Constraints

Truisms

TOOLS 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


Environmental Scanning

Outside-In analysisSociety Industry Internal company

Not what you wish it was, but what it actually is.

Assumptions

Constraints

Truisms


PEST(EL) Analysis of the External Environment

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.


PEST(EL) Analysis

Political 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


PEST(EL) Analysis

Economic 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


PEST(EL) AnalysisExample: GDP Country Ranking


PEST(EL) AnalysisExample: Population and Growth

87 India 1.3%125 US 0.9%152 China 0.5%199 Japan -0.1%


PEST(EL) AnalysisExample: Other Economic Indicators

http://www.indexmundi.com/g/r.aspx?v=67

GDP - per capita (PPP) - Country Comparison.website




PEST(EL) Analysis

Sociocultural Customs, norms, values Language Demographics Life expectancies Social institutions Status symbols Lifestyle Religious beliefs Attitudes toward foreigners Literacy level Human rights Environmentalism


14

The “Graying of America” 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!


PEST(EL) AnalysisSociocultural examples

8 Current Transformational Trends1. Expanding seniors market2. Impact of the Generation Y boomlet3. Increasing environmental awareness4. Growing health consciousness5. Declining mass market6. Changing pace and location of life7. Changing household composition8. Increasing diversity of workforce &

market


PEST(EL) Analysis

Technological Regulations on technology

transfer Energy availability & cost Natural resource availability Transportation network Skill level of workforce Patent-trademark protection Internet availability Telecommunications

infrastructure


PEST(EL) Analysis

Environmental and Legal xxx


PEST(EL) Form

1. Brainstorm the relevant factors that apply to the market, using the form.

2. Identify the information that applies to these factors.

3. Draw conclusions from this information.


Group Workshop: Pick 2 We do not have time to do all three of the elements in

class: 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.


The three options: Spoon Feed Approach: Lecture, Discussion, (Workshop)

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

Mastery Approach: (Lecture), Discussion, Workshop 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

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


Assignment #3: Caffeine Road Trip - Written report on Starbucks and Dunkin’ Donuts

Due by: Next Tuesday (next week)

Each person visit both a Starbucks and a Dunkin’ Donuts retail store and write a report. 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.

Visit the Starbucks and Dunkin’ Donuts web sites: 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. A few informal pages should suffice – if it wants to be longer, OK.


Strategic Management – Spring 2013

session03: pest(el) analysis

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