PEST is general analysis as external macro environment that will affect to the firm and the company. In the analysis, the macro environment is identifying of the opportunities and threats will affect the outcomes and organizational plan and means and the situation due to the control of political, economic, social and technological forces. With regards to this, can say that is the proper term to these factors. However, changes in the macroeconomic environment can create the new markets of chances and the articles are sometimes to construct a more affirmative analysis of the term PEST. Macro environment is that many country-specific needs and interests of the implementation for all the countries. In the following are the examples of the factors will considered in the PEST analysis. For examples, political factors, economic factors, social factors and technology factors.
Usage and Benefit of PEST
The decision making of organization in the management will affect by many factors in macro environment. Examples of macro environment change as employment law changes, economic recession, tax changes, government policy changes, international trade regulation, changes in exchange rates, changes in trade policy, income distribution and demographic changes as population, gender or composition. To analysis those factors as PEST model, as below:
Political factor is due to the degree of intervention economy as government policy. Futhermore, also due to the government need to provide what kind of the good services or product to consumer and the subsidizing firms is belong to what level of it and the priorities which in the term of business support known as important role. Political factor can affect many business area such as dictates the legal regulation as government impact the business with the taxation policy such as the price of goods and services will be rises when there is no tax on that or the company profile will direct be taxable, the health of the international as government must pass and force the laws to regarding the label and packaging of the protection of consumer, the base installation of the economy as the rail system. For examples, in the San Francisco Coffee House, the company have an agreement known as Franchise Agreement. The Franchise Agreement is specified as form of Licence of Agreement. This agreement is the factor of protect the operation of San Francisco Coffee House and the rights parties of the company. Particularly, this agreement is expert skilled of obtained to franchising and the intellectual of property right. This agreement is identify the intellectual of the franchisor’s property and other proprietary is going to protect by this licence. This agreement is also focus on the relationship between the parties of each other in a positive way and a expert constructive manner to them. Beside that, this agreement will also emphasize the need and requirement of the operation San Francisco Coffee House. The benefits to have an agreement are due to failure to protect their own property or business format and the most important is their profits as well is could take an legal action of that. By the way, once have abundant protections of the agreement, the company can benefit from the licence of their intellectual property as well and it is more easier to protect their property when it is registered and the most important can prove their ownership.
Economic factor is a major impact of a firm’s behaviour and organization of outcomes. This is regarding to economy recession, economic growth from overall of the market as the demand of the products rise when the higher national economic growth, monetary policy as interest rates as the higher interest rates it will cause more to borrow it will deeper the investment, foreign exchanges rates as the rises of foreign currency will impact the exporting goods more difficult, tax changes and inflation as it will make the wages demand of the employee higher and the cost of selling price rises too. Economic factor is due to the purchasing power of consumer. Such as the economic is known as the mood of consumer confidence as well, as the economy downturn the consumer do not have the confidence to purchase any goods or services, it will impact the market and the enterprise organization. During a recession, many firms are slow down to react to the falling demand levels will drop. Futhermore, a firm making similar product may utilize a price cutting policy. This will demand to a response to all the firm otherwise they may lose the market share. For examples, San Francisco Coffee House which in Croatian, in the market of Croatian, a great variety of international product and services is increasing. In the market San Francisco Coffee House, the salary grows up obviously, therefore the consumer of demand will increased for higher quality of the world brand names as well. This is due to the in Croatian is widely not available and the economic growth. In Croatian, the young consumer is target of international brand while the older people is still looking for domestic brands. As analysis, the purchasing habits also changeable geographically. The San Francisco Coffee House is most owned by foreign country as recent years those acquisitions occurred to San Francisco Coffee House. Although they would be entrepreneurs of the capitalization options while characteristic of domestic market in Croatian is bankruptcy for those smaller entrepreneurs. This reason is due to they are struggled to collect the trade debt. The traditional arrangement problematic is made by the international ownership of local banks even though this kind of problem is common of domestic market. The benefit of economic factor in San Francisco Coffee House is a decision related to the choice, another good means a good few. Income and wealth is not infinite, because only so much time. Trade off for individuals, business and society. In addition, economic assumes that people act rationally and try to make action to get their own compared to the costs associated with the greatest interest. Change is often rational considerations, rather than making the average marginal effect.
Political factor is