Pest Analysis: The Key Factors

Introduction

This essay examines the key PEST factors and appropriate strategic responses based on PESTEL analysis findings. Many organizations utilize PEST analysis as their primary strategic tool to develop future strategies and monitor their operational environment. Without considering dynamic processes, companies have minimal chances of long-term survival. As Yüksel (2012, p.52) emphasizes, "a company must increasingly take into account the environment within which it operates. To meet such needs, company decision-makers should adopt a strategic approach to the management of macro-environmental events, occurrences, and operations."

Theoretical Framework

The analysis provides major macro-PEST trends that companies need to consider and recommends appropriate responses to these factors. Additionally, the essay presents potential investment suggestions supported by current research and official publications. These sources provide the most relevant and up-to-date information regarding political, economic, social, and technological trends.

As noted by Johnson et al. (2018, p. 6), "All organizations need to identify external factors within their environment that could have an impact on their operations. Many of these will be things that the organization has no control over, but the implications of which need to be understood."

Key PEST Factors Analysis

Political (Legal) Factors

A significant political trend is the increasing demand for cycle lanes across major British cities. Research indicates strong public support for tax allocation toward cycle infrastructure, with citizens reporting enhanced safety in segregated bike lanes. Transport for London reported a 50% increase in cyclist numbers on routes with protected cycle superhighways (Pidd, 2018).

Economic Factors

Key economic considerations include:

• Vehicle Taxation Changes: The 2017 government introduction of new vehicle excise duty bands has significantly impacted UK road tax. Only zero-emission vehicles remain tax-exempt, while diesel and petrol vehicles face increased taxation (Auto Express, 2018).
• Brexit Impact: The UK's departure from the EU affects free trade arrangements and supply chains. Estimated annual losses could reach £4.5 billion without new trade agreements (Market-inspector.co.uk, 2018).
• China Relations: New opportunities emerge with the "Golden Era" for UK-China relations (Gov.uk, 2018).

Social Factors

The following table illustrates key social factors affecting the cycling industry:

Technological Factors

Significant technological trends include:

1. Social Media Growth: 93% of smartphone users actively engage with apps (Ipsos.com, 2018)
2. Electric Transport Evolution: Projected increase in EV and hybrid sales from 2.3 million (2014) to 11.5 million units by 2022 (McKinsey & Company, 2018)
3. E-bike Market Growth: Strong sales increase predicted due to relative affordability compared to cars (Emubikes.com, 2018)

Strategic Recommendations

Investment Priorities

1. Chinese Market Entry
2. Mobile Application Development
3. Electric Bike Portfolio Expansion
4. Infrastructure Advocacy

Conclusion

PEST analysis serves as a crucial tool for understanding the macro-environment and anticipating market changes. This framework significantly influences company strategy, enabling organizations to identify and prepare for potential obstacles. For businesses operating internationally, this analysis proves particularly valuable in enhancing success probability.

References

1. Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnér, P. (2018). Fundamentals of Strategy. Pearson Education.
2. Yüksel, I. (2012). Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. International Journal of Business and Management, 7(24), 52-66.
3. McKinsey & Company. (2018). The future of mobility in urban China.
4. Transport for London. (2018). Cycling Infrastructure Report.
5. Auto Express. (2018). UK Road Tax Changes: Complete Guide.
6. Market Inspector. (2018). Brexit Impact Analysis on UK Business.
7. Ipsos MORI. (2018). Mobile Technology Trends Report.
8. Government of UK. (2018). UK-China Economic and Financial Dialogue.
9. EMU Bikes. (2018). Electric Bike Market Analysis.
10. Pidd, H. (2018). Cycling Infrastructure Development in British Cities.