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ACCOUNTANT IN BUSINESS

WHAT IS PEST ANALYSIS?


PEST analysis stands for "Political, Economic, Social, and Technological
analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of management. These are known as PEST analysis.

Here we are analyzing the pest analysis because we want to open a new company Adidas
in Pakistan which is Actually a Football manufacturing company, a European company.
Firstly, he wants to analyze the pest analysis in Pakistan before starting their
business.
IMPORTANCE OF P EST ANALYSIS.
PEST influences are a helpful method of summarizing
the external environment in which a business operates.
ADIDAS A FOOTBALL MANUFACTURING COMPANY
We see, that Adidas is a world famous football manufacturing
company in Europe and supplies in all over the world and earned a huge amount of
profit. But not the company decided to start business in Pakistan.
PURPOSES OF ADIDAS
Adidas know that the per capita income of Pakistan is low and if we
manufactured the footballs in Pakistan then the cost will be reduced and here the labor
cost is less than Europe and the company can earn a big profit from Pakistan. But due to
some reasons Adidas Company has some problems because the company cannot know
the environmental position of Pakistan. Due to this reason he is doing the pest analysis in
Pakistan. here we see that how the pest analysis is done by Adidas?

COMPONENTS OF PEST ANALYSIS


POLITICAL FACTORS.
ECONOMIC FACTORS.
SOCIOCULTURAL FACTORS.
TECHNOLOGICAL FACTORS.

These are four factors whose applies in pest analysis mostly, but here all factors will be discussed
with details.

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ACCOUNTANT IN BUSINESS

POLITICAL FACTORS

Political factors, are how and to what degree a government interference in


his economy. Specifically, political factors include areas such as

Tax policy,
Labor law,
Environmental law,
Trade restrictions,
Tariffs,
Political stability.

Political factors may also include goods and services which the government
wants to provide or be provided but others there are some question in
our mind during the analysis which is…..

The political arena has a huge influence upon the regulation of businesses, and the
spending power of consumers and other businesses. You must consider issues such as:

 How stable is the political environment?


 Will government policy influence laws that regulate or tax your business?
 What is the government's position on marketing ethics?
 What is the government's policy on the economy?
 Does the government have a view on culture and religion?
 Is the government involved in trading agreements such as EU, NAFTA, ASEAN,
or others?

If these factors are goes in favor of Adidas then the company will decide that the
Pakistani political environment is favorable for doing business and I thought that it is a
big opportunity for Adidas to do business and for earn profit.

ECONOMIC FACTORS

Here the Adidas analyze the economy of Pakistan and know how the
economic factors are influence on company the factors may be include of

 Economic growth,
 Interest rates,
 Exchange rates
 Inflation rate.
 Employment level per capita.
 Long-term prospects for the economy Gross Domestic Product (GDP) per capita,
and so on.

UNIVERSITY OF MANAGEMENT & TECHNOLOGY


ACCOUNTANT IN BUSINESS

These factors have major impacts on how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and therefore to what extent a
business grows and expands. Exchange rates affect the costs of exporting goods and the
supply and price of imported goods in an economy. Here the Adidas knows that if the
majority of factors are going to his favor then the company can decide the start his
business.

SOCIOCULTURAL FACTORS.

In the sociocultural factors the Adidas company will analyze the Social
factors include the

Cultural aspects
Health consciousness,
Population growth rate,
Age distribution,
Career attitudes
Emphasis on safety.

Trends in social factors affect the demand for a company's products


and how that company operates. For example, an aging
population may imply a smaller and less-willing workforce (thus
increasing the cost of labor). Furthermore, companies may
change various management strategies to adapt to these social
trends (such as recruiting older workers) and some question
arises in our mind because the culture is different from country to
country these may be….

The social and cultural influences on business vary from country to country. It is very
important that such factors are considered. Factors include:

 What is the dominant religion?


 What are attitudes to foreign products and services?
 Does language impact upon the diffusion of products onto markets?
 How much time do consumers have for leisure?
 What are the roles of men and women within society?
 How long are the population living? Are the older generations wealthy?
 Does the population have a strong/weak opinion on green issues?

If these are in favor of Adidas Company then will be the best environment for investing
in Pakistan for manufacturing footballs.

TECHNOLOGICAL FACTORS.

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ACCOUNTANT IN BUSINESS

In technological factors the Adidas Company will


analyze the Technological factors which include ecological and
environmental aspects, such as R&D activity, automation,
technology incentives and the rate of technological change.
They can determine barriers to entry, minimum efficient
production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality, and
lead to innovation.

We know that, Technology is vital for competitive advantage, and is a major driver
of globalization. Consider the following points:

 Does technology allow for products and services to be made more cheaply and to
a better standard of quality?
 Do the technologies offer consumers and businesses more innovative products
and services such as Internet banking, new generation mobile telephones, etc?
 How is distribution changed by new technologies e.g. books via the Internet,
flight tickets, auctions, etc?
 Does technology offer companies a new way to communicate with consumers e.g.
banners, Customer Relationship Management (CRM), etc?

Adidas Manufacturing Company analyze the technological factors if they meet their
requirements then the company will decide it positively.

CONCLUSION

The conclusion of Adidas manufacturing footballs company will be that the company
will firstly analyzed the four factors pest analysis if these are fulfilled the company
requirements and we know that all factors never fulfilled at desired but if the majority
will favorable then the company will agree to start his business in Pakistan and
manufactured footballs and enjoyed the huge profit due to the business of company will
expand.

UNIVERSITY OF MANAGEMENT & TECHNOLOGY


ACCOUNTANT IN BUSINESS

UNIVERSITY OF MANAGEMENT & TECHNOLOGY


ACCOUNTANT IN BUSINESS

UNIVERSITY OF MANAGEMENT & TECHNOLOGY

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