Business Methods
Essay title: Business Methods
BUSINESS METHODS
PEST (Political, Economical Social and Technological environment ) Analysis The external environment of any organisation / university / faculty / department etc. can be analyzed by conducting a PEST analysis. The acronym PEST (sometimes rearranged as STEP) is used to describe a framework for the analysis a range of macro environmental factors including the Political, Economical Social and Technological environment. A PEST analysis fits into an overall environmental scan including the SWOT analysis and McKinsey’s 7S Model, which is briefly discussed below and also referred to in the document ‘Preparing a SWOT Analysis. For a unit (referring to any area under review be it an academic department, a research unit, an administrative unit or a support service unit), a PEST analysis should relate to: 1. The external environment outside of the unit but within UCC, and 2. The external environment outside of UCC, given the national and international profile of the office The PEST analysis provides the following simple framework: Political FactorsPolitical factors can have a direct impact on the way business operates. Decisions made by government affect the operations of units within the university to a varying degree. Political refers to the big and small ‘p’ political forces and influences that may affect the performance of, or the options open to the unit concerned. The political arena has a huge influence upon the regulation of public and private sector businesses, and the spending power of consumers and other businesses, both within UCC and outside of UCC. Political factors include government regulations and legal issues and define both formal and informal rules under which UCC and units must operate. Depending on its role and function within the university a unit may need to consider issues such as: • How stable is the internal/external political environment? • Will government policy influence laws that regulate third level education? • What is the governments policy on the education? • Is the government involved in trading agreements such as the Bologna Agreement? • The impact of employment laws • The impact of environmental regulations • Trade restrictions and tariffs • Political stability (internally and externally • Decision-making structures Economic FactorsAll businesses are affected by economical factors nationally and globally. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behaviour. The dramatic impact of reduced funds upon UCC is already very apparent. This will impact upon the nature of the competition faced by the university and particular units within the university, upon service provision, and upon the financial resources available within UCC. Economic factors affect the purchasing power of potential
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customers, and the state of the internal/external economy in the short and long-term. The unit may need to consider:• Economic growth • Interest rates • Inflation rate • Budget allocation • The level of inflation • Employment level per capita • Long-term prospects for the economy and the impact upon funding of third Level Education etc Social/sociological FactorsSocial factors will include the demographic changes, trends in the way people live, work and think and cultural aspects of the macro environment. These factors affect customer needs and the size of potential markets (inside and outside of UCC). • Population growth rate • Age distribution • Career attitudes • Internal/external emphasis on safety • Internal/external attitudes to change • What is the stakeholder expectation of the unit? • What is the perceived impact of the unit upon UCC and external stakeholders? • How are views expressed? • How does the unit respond to such views? Technological FactorsNew approaches to doing new and old things, and tackling new and old problems do not necessarily involve technical factors, however, technological factors are vital for competitive advantage, and are a major driver of change and efficiency. Technological; factors can for example lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. New technology is changing the way business operates. The Internet is having a profound impact on the strategy of organisations. . Academics and administrative staff can now access UCC 24 hours a day comfortably from their homes. Expectations in relation to response times, for example, have altered dramatically. This technological revolution means a faster exchange of information beneficial for businesses as they can react quickly to changes within their operating environment. Those businesses,