Global Environmental Scan PEST Analysis

What You Will Learn…

� PEST Analysis � Political, economic, socio-cultural, and

technological factors that affect international business (PEST)

Review

� What are the 3 types of market segmentation? 1.  Demographic (age, gender, income,

occupation, etc.) 2.  Geographic (local, state, regional, national,

global) 3.  Psychographic (attitudes, interests, opinions,

& lifestyles)

Identifying & Analyzing Markets

�  Surest way for businesses to connect with customers?

�  Know the people well! ◦ Where they live ◦  Income Level ◦ Age ◦  Ethnic Background ◦ Values ◦  Interests

Build a Global Perspective � Geographic segmentation is important for

multi-national and global businesses and brands

�  Regional and national marketing programs to alter: ◦  Products ◦  Advertising ◦  Promotion

� Meet the individual needs of geographic segments

Global Environmental Scan-PEST � Political Factors ◦ Government Stability ◦ Trade regulations and agreements ◦  Laws that impact company operations �  Domestic laws must be followed by foreigners ◦  Ex. Toys cannot be advertised in Greece;

important for retailers

Political – Questions to Ask �  What are their views on business policy, and on

other policies that affect your organization? �  How widespread are corruption and organized

crime? �  Could any pending legislation or taxation

changes affect your business, either positively or negatively?

�  How will business regulation, along with any planned changes to it, affect your business?

Global Environmental Scan-PEST � Economic Factors ◦  Infrastructure (buildings, roads, power supply) ◦ Quality and cost of labor ◦ Taxes ◦  Standard of living (income, poverty rate,

healthcare, etc.) ◦  Employee Benefits �  Ex. France restricts work week to 35 hours;

requires companies to consult with employees before downsizing or restructuring

Economic – Questions to Ask �  How stable is the current economy? Is it

growing, stagnating, or declining? �  Are customers' levels of disposable income

rising or falling? How is this likely to change in the next few years?

�  What is the unemployment rate? �  Will it be easy to build a skilled workforce? Or

will it be expensive to hire skilled labor?

Global Environmental Scan-PEST

�  Socio-Cultural Factors ◦  Language and Symbols �  Ex. US considers 13 unlucky-some hotels do not

have a 13th floor �  Ex. China associates #4 with death; sell in groups of

6 or 8

◦ Holidays and Religious Observances �  Ex. Cow is sacred in India; little beef sold

◦  Social and Business Etiquette �  Ex. Gift giving can be expected in the Far East;

considered a bribe in US and Canada

Socio-Cultural – Questions to Ask

�  What is the population's growth rate and age profile? How is this likely to change?

�  What are your society's levels of health, education, and social mobility?

�  What employment patterns, job market trends, and attitudes toward work can you observe

�  How do religious beliefs and lifestyle choices affect the population?

Global Environmental Scan-PEST � Technological Factors ◦ Measurement systems ◦  Electricity voltage standards ◦ Use of computers, faxes, voice mail, cell

phones and Internet

Technological– Questions to Ask �  Are there any new technologies that you could

be using? �  Are there any new technologies on the horizon

that could radically affect your work or your industry?

�  Is there anything you can do to take advantage of this?

PEST Video

� PEST Video

PEST In-Class Activity � You have been asked to perform a global

environmental scan (PEST) whether or not it would be profitable to open a top-of-the-line bicycle store in given country.

� Choose a foreign country and present your findings informally to the class today (2-3 minutes)

� Use the World Fact Book as a resource (search on Google)