PEST/PESTEL

Question 1

Micro-Environment/Macro-Environment

Answer 1

• Micro - the immediate environment the business interacts frequently and over which it may have some control; eg, competitors, suppliers, customers
• Macro - the wider environment outside the industry and market, beyond the influence on the company but may have an influence on micro environment eg, government

Question 2

Macro Environment

Answer 2

Influences:

1. Socio-demographic: social, cultural, demographic forces
2. Technological: products, processes, IT, transport
3. Economic: fiscal and monetary policy, income, living standards
4. Environmental: waste disposal, pollution
5. Political: government, legal, regulatory

Scan the environment
Monitor the environment
Forecast
Assess

Question 3

PEST

Answer 3

Political, Economic, Social, Technological

• Helps a business understand the major forces of change
• Finds out how impacts impact on:
  1. Internal aspect of an organisation
  2. The organisation’s product markets

Analysis examines:

• Resource markets
• The industry in which the organisation competes: buying/selling power, threat of entry, threat of substitutes, competitive rivalry

Question 4

Political Environment

Answer 4

• Legislation + regulation
• Changes in government
• State intervention
• Political risk

Question 5

Economic Environment

Answer 5

Fiscal Policy - varying regulation
Monetary Policy - varying supply and price of money
Economic growth - GDP
Economic Policy - Control levels of tax and expenditure
Consumer expenditure
Investment expenditure
Exchange rates
Interest rates
Inflation

-Aviation growth relates to GDP success

Question 6

Socio-cultural Environment

Answer 6

Values, attitudes and beliefs
Intercultural differences

Demography: studies of population is important for the travel industry - age, size, structure/make up

Question 7

Technological Environment

Answer 7

Pose opportunities and threats:

• Improve goods and services
• May render an organisation’s product or service obsolete
• Better coordination/more efficient/flexible/responsive

Airlines:

• Check-in procedures
• Economies of scale - lowering costs
• Faster registration

-Online conferences = threat to airlines etc

Question 8

Environmental Influences

Answer 8

Pollution from aviation - airports/airlines/ships
Waste disposal, energy use
Disturbance of wildlife

Question 9

Purpose of PEST Analysis

Answer 9

• Provides a framework for aviation - analyse opportunities and threats as part of their external operating environment
• Provides for scenario planning and allows organisations to consider a range of strategies to deal with a variety of possible situations.

Question 10

PEST Case: Tigerair

Answer 10

LCC in Singapore, Asia

• Political: 9/11, State Aid, governments
• Economic: Air travel related to GDP and incomes, Asia growing fast
• Socio-cultural: Ageing population
• Technological: Internet, surface transport
• Environmental: H1N1, pandemics, SARS etc