HR Assignment Example | Topics and Well Written Essays - 1250 words

HR - Assignment Example Downey (2007, p. 6) provides further insight on what PEST analysis means, highlighting the fact that it is a scan of the external macro-environment within which an organisation operates. It is broadly broken down into political, economic, social-cultural and technological factors which form the four tenets of PEST analysis. This part of the study will explore the concept of PEST analysis using practical examples. The political aspect of the PEST analysis involves the effects of government policy on a firm since this consideration impacts nearly all aspects of the firm’s operations. Henry (2008, p. 52) states that the political factors affecting a firm do not merely arise from legislation but encompasses issues such as government stability, taxation policies and government regulation. With the advent of globalisation, government stability, which has traditionally not been a concern in developed nations such as the UK, can now not escape attention as firms seek to transform into multinationals. Establishment of supranational cooperation such as the European Union also comes into play as cross-national standardization takes course. Deregulation of an industry by the government may result in new entrants that practice competitive pricing and thus affect incumbents. The second aspect in PEST analysis involves economic considerations, where there is the analysis of economic indicators such as interest rates, people’s disposable incomes, unemployment rates, inflation, currency strength and global economics (Henry 2008, p. 54). A practical example is one in which a firm dealing with importations in the UK has to monitor the strength of the Sterling Pound since a strong Pound could easily make importation quite expensive. The same firm is also affected by global oil price dynamics and must have felt the repercussions of an economic downturn resulting from American economics. In such a recession, the spending power of consumers declines and lay-offs increas e hence affecting such a firm’s sales. All of these should be analysed if the firm is to navigate the industry properly. Osborne and Brown (2005, p. 17) explain that firms are impacted by social factors like an aging population, social inclusion agitation, new social needs and transformation of previous needs and need for sustainable societies. All these affect a firm’s market size, customer loyalty and growth and thus are weighty considerations for firms. For instance, population demographics may determine the products that will have large markets and strategies that will access such markets. Different products and strategies appeal to both young and ageing populations in significantly different ways; hence a firm has to ensure it analyses population trends and future expectations. The last aspect of PEST analysis is technology, where a firm has to ensure it places itself in a strategic position to take advantage of new and useful technologies since the implications i n terms of competitiveness are far-reaching (Gimbert 2011, p. 49). Some of the most impacting technologies include IT, internet and genetic engineering while emerging areas such as nanotechnology are bound to be influential. A practical example of how analysis of the technological factors is crucial is in the advent of the internet, where the first firms to capitalise on its advantages such as ease of communication and access to wider markets gained immense competitive advantages over their rivals. Part 2: a) Structural Problems Sony is a largely successful