PEST FACTORS & IMPACT ON INTERNATIONAL BUSINESS

GROUP MEMBERS :-

NAINA CHAUDHARI (6) RINKU CHAUHAN (7) KIRAN DANKE (8) ADITI DESAI (9) PRIYANKA DHANVEKAR
(10)

Definition Of International Business

The economic system of exchanging good and services, conducted between individuals and businesses in multiple countries.

PEST ANALYSIS
P - Political changes E - Economic changes S - Socio - Cultural changes T - Technological changes

IMPORTANCE OF PEST ANALYSIS

While entering in new business Helps to break free of unconscious assumptions Help to effectively adapt to the realities of the new

environment

KOTLERS VIEW ON PEST ANALYSIS

a useful strategic tool framework for reviewing a situation applied by companies to review a strategic

directions effective for business and strategic planning, marketing planning, business and product development and research reports.

 PEST analysis is also known as:

STEP, PESTEL, PESTLE, PESTE, PESTLIED, SLEPT, STEEPLE, STEEPLED, LE PEST C and LEPEST analysis.

SOURCES FOR PEST ANALYSIS

Newspapers, periodicals, current books

Trade organizations
Government agencies

Industry analysts
Financial analysts

POLITICAL ANALYSIS
CASE OF MCDONALDS McDonalds established in California during the 1940s Aggressive plan to expand in all other cities of Pakistan Franchises owned by Lakson Group of Companies in Pakistan In Pakistan- consumer protection laws are not very strong In countries like US, where the consumer protection laws are very strong

SONY Government laws for minimum wage Less profit unless they increase prices of items.

CASE OF ENRON An American energy company based in Houston, Texas. In 1992, the Dabhol power plant near Bombay Supply 2,000 megawatts of electricity Decentralized government control over industrial licensing opened the country more to foreign investment. Failed due to endless disputes over prices and terms of the deal

ICI PAINTS(Bekshire, UK) : Worlds largest manufacturing of paints and industrial coatings. In 1965 ICI UK acquired a 50% in Fullers Paints Pakistan Ltd Government has imposed 15% sales tax and heavy duties on imports and raw materials. As ICI import 75% of its raw materials. Profit margin have decreased.

ECONOMIC FACTORS
Businesses are affected nationally and globally

Affect consumer confidence and behaviour

Impact upon the nature of the competition faced

by the business. Affect the purchasing power of potential customers

ECONOMIC FACTORS
Economic growth Interest rates Inflation rate Budget allocation The level of inflation

EFFECT OF INTERNATIONAL BUSINESS ON INDIAN ECONOMY

Entry of MNCs in India

Reason : new economic policy by government of India in July 1991 incentives to the foreign investors Now the question is how the MNCs are affecting Indian economy whether they are useful for our economy or not ?

MNCs AND INDIAN INDUSTRIES:

Economists view

MNCs are helpful for Indian industrial sector

New technique of production management

techniques Increase competition in the industrial sector Demand for skilled persons Inflow of Foreign capital

SOFTWARE SECTOR

TCS , Infosys have controlled salary escalations,

resulting in Wipro, Satyam, HCL to follow suit Difficult for them to remain the price setters Under pressure to match salaries with those offered by MNCs MNCS are increasingly recruiting employees

BISLERIS EXPANSION IN EUROPE

Ramesh Chauhan owned brand, Bisleri, is set to

sell sparkling water in Europe and US. Scope for BISLERI in the field Compensate the deterioration of image Silence the critics and increase the faith of the customer International brand image Witness a major tussle between Bisleri and CocaCola's Kinley

 The fact that we have reached out to

international markets is an acknowledgement of our quality and our penchant for safety and purity - Ramesh Chauhan

INFLATION
In Asia, Vietnam becomes the country suffered

most from inflation.

Struggle for their lives every day, unemployment

rate goes higher, and many companies and factories have to shut down because of inflation.

CEMENT COMPANIES AFFECTED

Higher input costs, low market valuations and

scaled up capacity amidst reduced demand

Growth rate is projected to drop below 10 % for

the current fiscal

High inflation and home loan rates have slowed

down the growth trajectory of the real estate sector

INCREASE IN SPANISH INVESTMENTS

The Spanish investments in india rose five times

to $158 million in last year Over ten leading companies entered the country Many Spanish companies are present in sectors like infrastructure, insurance, auto components and ports and more are keen to enter the market as Indias economy is quite promising

 Invest in Spain is a government agency for

promotion and attraction of foreign investments in Spain. Spanish investment - $158 mn increased by 500% from the previous year Investing in the automotive and infrastructure segments in India Indian corporate like Infosys, Tata Consultancy Services, ICICI Bank, Essar Group, Navneet Publications, X L Telecom & Energy, Tata Motors and Kingfisher Airlines met Spanish delegates.

BUDGET 2009: RETAIL SECTOR DISAPPOINTED

Budget had not mention FDI or industry status for

retail
Plans for increasing expenditure in infrastructure

under various programes, besides hiking the income tax ceiling, will increase consumption
Abolition of FBT and hike in allocation for rural

and urban areas will lead to boost in demand.

PROVIDE STIMULUS TO REAL ESTATE SECTOR

Indian economy as a whole has largely been

insulated against the global economic slowdown The Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector Need for the Government to provide a stimulus for the industry to revive this ailing spectrum of sectors

SOCIO-CULTURAL ANALYSIS
MCDONALD AND HINDU CULTURE McDonalds is the worlds largest user of beef Maharaja Mac which is made form mutton. McAloo Tikki Burger, which is made from chicken. Found beef extract in the oil. Close McDonalds 27 stores in the country.

PROCTER & GAMBLES CASE: Camay soap. Diapers. COCO COLA: Labeled No- alcohol on their bottles supplied to the Gulf countries. NOKIA:Introduced Hindi SMS for Indian users.

TECHNOLOGICAL FACTORS
Major impact on the business Affects business prospects, cuts down the profits

and forces the management to change the course of the business operations
Change in technology changes the work cultures,

the methods and the systems

Technological environment consists of: State of domestic or indigenous technology Facilities for Research and Development Technical Collaborations etc

OFTECHNOLOGICAL ENVIRONMENT
Non- replacement of new technology affects the

survival and growth prospects Advances helps to improve quality of product, increase output and reduce the cost of production Latest technology enhance marketability of products and face competition

iPHONE

Apple deserved kudos for coming up with a

product idea like the iPhone and also implementing it successfully

Aggressive entry into the mobile phone market

and had managed to attract the attention of the existing competitors

AIRLINE INDUSTRY
Increasing use of the Internet has provided many

opportunities to airlines Long-term effort to promote Indian aviation infrastructure The Authority is developing modern communication, navigation, surveillance, and air traffic management systems for India's aviation sector that will help the country meet the expected growth and demand for air passenger and cargo service over the next decade Helps in attracting investments in improving the infrastructure and services

 Microsoft's operating system Vista most recent

generation released worldwide on January 30, 2007

Vista was aimed to improve the security of the

most widely used PC operating system in the world

 Reasons for Failure:-

- securities features were not much better than the previous versions of Windows - came with its own list of hardware requirements - Vista ran slower on PCs than XP Prevented Vista from taking over from its predecessors

FAILURE OF HD-DVD
HD-DVD group was holding a press conference,

Warner Bros withdrawing its support for HD-DVD Exclusively supporting backing rival format Bluray There were several factors that led to HD-DVD format lose out to Blu-ray Most commonly cited explanation is that Sony did a better job convincing major film studios