Analysis of Internal and External Environment Through PEST Essay

To analyse the external influences on my product will have to use PESTEL, which stands for:

* Political

* Economical

* Social

* Technological

* Environmental

* Legal

Pestel is a way of analysing the external environment it is used by grouping all the external factors and analysing them one by one to evaluate the organisations performance with these external influences against them.

Political

Political influences on my product would be taxes I.e. V.A.T value added tax, when my product goes on sale it will have a set price which will be to cover cost and make a profit and to cover tax deductions which the government charges. However children’s shoes are exempt from taxes so when my product goes on sale the price for children’s sizes will be lower as they don’t use up as much material and they aren’t charged tax for where as adult trainers are so they will be more expensive. Also the government might intervene with the manufacturing process of my product if there is a sudden shortage of raw materials which are used to make my product which result in preserving the raw material and less manufacturing of my product.

Economical

Economical Factors, which could influence the success of my prodct, would be the rate of inflation because the current rate of inflation is about 2 and half percent. So if I plan to make 1million pounds in ten years time I have to take into account that 1million pounds this year might only be worth 8 hundred thousand pounds in ten years time so my goal have to be realistic and allow for inflation. Also if unemployment is at a low it could affect my target market as most unemployed people are young either dropped out of school of just finished university or have no money to purchase my product this could affect sales figures. As energy becomes more in demand the price of it might go up or companies might be required to use less of it.

Social

I also have to consider the social factors such as the environment my product has to be environmentally friendly when it being used and when it is being produced e.g. the gases which can cause pollution the materials cant be harmful towards the environment of wildlife. As my product has to fit the lifestyle of the consumer it’ll mean it has to be hard wearing and comfortable as it’s a trainer under constant force so it has to be durable.

Technological

When marketing a new product or manufacturing a new product new technology plays a big part as it can help you cut costs and help you be a lot more efficient. It brings new opportunities to the management and to the low level workers i.e. e-mail and top of the range machines that don’t need to be supervised by anybody that can do the job in a quicker time and to a higher standard.. It can help with energy saving which again will reduce costs. It will help introduce new materials, which could be environmentally friendly if my product was made of products that were friendly to the environment it might influence people to by it. If technology gets better then my competitors will have better technology and more opportunities to create high quality products, which could affect the sales of my product.

Environmental

Materials and chemical that are involved in the making of the product have to be as environmentally friendly as possible.

Legal

On any service or product there are legal restrictions and standards for example on my product as there is a highly competitive market for them you are not allowed to take some one else designs or ideas. Or you couldn’t take a product out on the market already and claim it to be yours or put your logo or design on it. Also you cannot create a monopoly in the market there has to be some sort of competition otherwise the competition commission will intervene as the company which creates a monopoly can price fix this will not benefit the consumers at all as if they want a cheaper option there wont be one as a monopoly is one company who dominates the market without any competition.