External factors are those which affect a business but are outside its control. The acronym PEST, which stands for Political, Economic, Social and Technological influences, can be used to summarise these external factors. UNISON, Britain's largest public sector trade union, uses PEST analysis to understand the needs of its members and to aid decision making. An example of where it is using PEST analysis to good effect is with the Migrant Workers Participation Project which concentrates on employees who have moved to the UK from overseas. As part of its political analysis for example, UNISON must stay abreast of any legislation changes affecting migrant workers. It will lobby the government where it feels that the law need to be amended to better meet the needs of its members.
External factors affect entire industries as well as individual workers. By assessing the external factors affecting businesses, decisions can be made about how to respond. Bingo halls have suffered in the last few years due to a number of influences that were outside their control. The smoking ban, which commenced in 2007, impacted on the number of people wishing to socialise away from their own homes. Tougher regulations introduced by the government also contributed to a decline in the Bingo sector. To respond to these influences, Mecca is relying on the increased trend towards younger people playing bingo. It is attempting to attract younger customers by introducing a number of innovations such as Binglo, its after-dark version of the game. Bingo halls are being given a more modern look with bars, amusement machines and wall-mounted televisions. In Mecca's case initial results look promising. Rank, which owns Mecca, has reported that the new format is attracting more customers and it has plans to convert about 50 more of its sites. (The Sunday Times 28th February 2010)
- What does PEST stand for?
- Using the case study, explain the technological factors that have affected migrant workers in the UK over the past few years.
- Using the article, analyse the external factors that have recently affected bingo providers.
Answers to questions
- What does PEST stand for? Political, economic, social, technological
- Using the case study, explain the technological factors that have affected migrant workers in the UK over the past few years, Increased automation in factories,The internet, Increased availability and reduced cost of transport, Advances in online money transfers, Improvements in telecommunications
- Analyse the external factors that have recently affected bingo providers, Political – the smoking ban and changed regulations on amusement machines, Economic – high unemployment and uncertainty may put people off going to bingo, Social – the trend for younger customers at bingo, Technological – innovations in the amusement industry e.g. virtual snail racing