Organisation and environment
Assessment 1 essay
Analysis of the External Environment of Business
Pest analysis is a useful tool for understanding market growth or decline, a pest analysis is a business measurement tool. Pest analysis is an analysis of the external macro ? environment that affect all firms. Pest analysis is an analysis of the political, economic, social and technological factors affecting a business. Such external factors usually are beyond the firms control and sometimes present themselves as threats. I have chosen for my main focus the economical environment.
Economical
All businesses are affected by economical factors nationally and globally. Interest rate policy and fiscal policy will have to be set accordingly. Within the UK the climate of the economy dictates how consumer may behave within society. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behavior.
An economy which is booming is characterized by certain variables. Unemployment is low, job confidence is high, and because of this confidence spending by consumers is also high. This has an impact on most businesses. Political environment is linked with the economical environment because the government needs to make sure that the economy stays in a boom. By doing this there is more money moving in the economy people are buying more and companies are producing more. Their is a more efficient circular flow of income. Companies by having more money it is not likely that they spend all their revenue on rent and wages. They will also invest some in better and more efficient equipment and machinery. These are used to produce goods and services which increase money in the economy an injection. Government Orga ...