This method looks at many things such as:
- New markets
- Global influences
- Business and product development
- For example: Apple created the ipod touch; this has given apple opportunity to bring internet access to ipod for the first time in its history. Since this has happened it has helped Apple to develop more on the target market that they are currently in and also to expand on their other markets
Threats is also another external factor and they look at all those things which could damage the performance of a product or service.
This method looks at many things such as:
- Political issues
- Legislation & environmental effects
- Market demands
For example Sony had a most important threat for the launch of their playstation3. This is because of its their late release after rivals Nintendo and Xbox released their console gaming products and made major sales in 2007. Also price rises is another major threat to the company. It’s the increase in price levels of goods and services.
I have produced a table below of a swot analysis for M&S foods.
What is a PEST?
Political, economics, social and technological factors are analyses by an organisation to assess the external influence on their business. For example, by carrying out a PEST analysis for M&S, then the business can identify political, government actions or laws can have impact on the business. For example the government may increase tax for M&S around the town. In terms of economics, the purchasing power or income level in the area, can influence the business in terms of revenue or cost.
Political factors
The political factor has a huge pressure on the regulation of business. For example: political changes like change of government could affect the minimum wage of M&S workers. Also if they don’t recycle their products it will be affected by Environmental issues. When you shop at M&S the customers are asked for the bags, by asking each customer do you need a bag, they try to reduce the amount of shopping bags they use.
M&S has started to charge food shoppers for carrier bags, they say customers will have to pay 5p for plastic bags, and the money they will raised will go straight to environmental charity
M&S is just charging on food bags and not all of M&S’s plastic bags as a first step towards environment, the owner of M&S said, in M&S the huge amount of plastic bags use in foods.
Economic Factors
Marketers need to consider the state of the economy in the short and long term. This is especially true when planning for international marketing.
For example: at M&S, clothing prices were cut by 6% before Christmas, this generated 5% more transactions - the biggest increase in items sold for six years - but the value of total sales still decreased. Near to Christmas last year the VAT went down to 15% from 17.5%
Inflation could affect the pricing of garments also other economic factors can be like the government; therefore M&S will have to put their prices up.
Social Factors.
The social and cultural influences on business differ from country to country. It is very important that such factors are considered. For example, certain social factors for M&S would be that as for its Christmas coming up this will impact on young women to buy lowered price of clothes from January sales. After a period of celebration, consumers need to feel better about themselves.
Because of fashion trends and seasonal M&S have to sell the old stock so that they can bring new stock in M&S.
Technological Factors
Technology is very important for competitive advantage, and is a main driver of globalisation. Consider the following points. For example: technological factors, they use a technology to make fashionable new clothes for each season by using factory materials, M&S use computer for new designs, also, they use machinery because with this they can produce their products more quickly.
