Highway Agency - Pest Analysis

Assignment 3: Highways Agency – PEST analysis

Question 1

Describe the main external factors that a business organization needs to be aware of.

Answer

The main external factors that a business organization needs to be aware of are divided into 6 segments, demographic, economic, political/legal, technological, sociocultural and global.

Demographic

The demographic segment is concerned with a population’s size, age structure, geographic distribution, ethnic mix and income distribution. Demographic segments are commonly analyzed on a global basis because of their potential affect across countries’ borders and because many firms compete in global market.

Economic

The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. In general, firm seek to compete in relatively stable economies with strong potential growth. In terms of specific economic environment, companies competing in Japan or desiring to do so might carefully evaluate the meaning of the position recently taken by some that this nation’s economy has ingrained flaws such as”…unwieldy corporate structures, dogged loyalty to increasingly commoditized business lines and a history of punting problems into the future”.

Political/Legal

The political or legal segment is the arena in which organizations and interest groups compete for attention, resources, and a voice in overseeing the body of laws and regulations guiding interactions among nations as well as between firms and various local governmental agencies. Essentially this segment represents how organizations try to influence governments and how they try to understand the influences (current and projected) of those governments on their strategic actions.

Sociocultural

Sociocultural segment is concerned with a society’s attitude and cultural values. Because attitudes and values form the cornerstone of a society, they often drive demographic, economic, political/legal, and technological...