External influences

by Business Case Studies on Monday 4th January, 2010

No business operates in a vacuum organisations are affected by external influences. The Highways Agency is an executive agency of the Department for Transport and is responsible for the road network in England. It aims for 'safe roads, reliable journeys, informed travellers'. The function of the Highways Agency includes tackling congestion and improving safety. In addition to the government's transport policy, several other external factors impact on the operations of the Highways Agency. PEST analysis (political, economic, social and technological) is a useful tool that can be used to assess external factors and use these to plan future strategies.

Despite some negative external influences over the last couple of years, many retailers have enjoyed healthy sales this Christmas. Customers have still been cautious, the recession may lead to further job losses and there are fears of tax increases, however the British Retail Consortium expects that spending in the high street this Christmas will be higher than last year. The department store chain Selfridges expects sales to have increased by 16% over Christmas 2008 and John Lewis department stores saw a 25% rise on Christmas Eve sales. Sales may well have been even higher if retailers had not been hit with another external influence – the weather. Trade had been rising steadily throughout December but was affected by the snow at the end of the month.

Through analysis of the external factors, retailers have responded to the trading environment in which they operate and have taken action accordingly. Many started their sales early and have offered some difficult to resist bargains which have contributed to their December performance. (Sunday Times 3rd January 2010)

Questions

  1. What does PEST stand for?
  2. From the above article, identify the external influences that have affected John Lewis department stores.
  3. Explain how an organisation like the Highways Agency can use PEST analysis.
  4. Analyse how technological advancements have impacted on a business with which you are familiar.

Answers to questions

  1. What does PEST stand for? Political, Economic, Social, Technological
  2. From the above article, identify the external influences that have affected John Lewis department stores. Inclement weather (environmental), Recession (economic), Trend for heritage goods (social)
  3. Using examples, explain how an organisation like the Highways Agency can use PEST analysis. Review external forces e.g. a social factor is the people are less tolerant of delays, Plan appropriate activities to deal with these external influences e.g. the active traffic management (ATM) scheme on the M42 that allows motorists to use the hard shoulder during peak periods
  4. Analyse how technological advancements have impacted on a business with which you are familiar. Examples might include how technology has been used to develop products or processes within an organisation. Alternatively, how competitors have used technology putting the business at a disadvantage.

Previous post:

Next post: