Pest Analysis: The Key Factors

This essay will focus on the key PEST factors and what responses should be made by according to the PESTEL findings. Many companies use PEST analysis as their strategic analysis tool for their brands to determine strategies for the future as well as to track the environment the company is operating in. Without considering dynamic processes there is less to no chance for companies to survive for a long-term. As Yüksel (2012 p.52) highlights “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.” (Yüksel, 2012 p. 52)

The essay will provide the major macro-PEST trends that companies need to be aware of and provide responses that should be made according to these factors, this will be a feature of this essay and will be followed up by some suggestions about investments that the company should potentially should think about doing. The suggestions will be supported by researched official articles that are published online because these resources are the most relevant and up to date material and information for political, economic, social and technological trends.

“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.” (Anon, 2018 p. 6). One of the most popular tools is PEST analysis. PEST analysis can also be referred to as PEST analysis. It is a useful method for understanding business environment as it gives a rigorous idea of the external environment of the organization, market growth or decline. PEST stands for political, economic, social and technological factors.

Aware of (P/E/S/T):

Political (Legal):

A growing political trend is an increasing demand for cycle lanes across big cities in Britain. Many people in the UK support their taxes being spent on cycle lanes and they feel safer while cycling in segregated bike lanes. “Last year Transport for London reported a 50% increase in the number of cyclists using some roads where a protected cycle superhighway had been built.” (Pidd, 2018)

Economical:

An economic trend the cycling industry should be aware of is that in the 2017 government announced a new set of vehicle excise duty bands, resulting in major changes for UK road tax, new potential buyers and car owners. “Only electric and other zero-emissions cars are now tax-exempt, with diesel and petrol cars on average costlier to tax.” (Auto Express, 2018). From April 2018 Buyers of new diesel cars will be charged with road tax that could cost a lot more for British driver every year. The changes were targeted mainly at diesel cars. “This could result in diesel owners paying up to £500 more a year to tax their vehicle.” (Smith, 2018)

Another factor companies should be aware of is the issue Brexit which means is no longer going to be free trade between UK and EU and this will affect the supply chain. “It is predicted that the UK will experience a loss of at least £4.5 billion a year if they leave the EU without negotiating a new trade agreement with the EU.” (Market-inspector.co.uk, 2018). However, that means the UK can do its own trade deals with other new countries. According to Gov.uk, (2018), there will be a” New phase in the Golden Era for UK-China relations.”

Social (Environment):

A social fact that companies should be more aware of is affordability. “While only 10% of the world’s population can afford a car, an estimated 80% of people can afford a bike.” (Tmr.qld.gov.au, 2018). For many population groups like young people or family’s with the low income it would offer increased mobility.

Technological:

One of the trends the cycling industry should be responsive of is a growing number of social media platforms. For companies to stay relevant and do good it is important to adapt and participate in the growth of this way of marketing for their business. The growth of mobile apps is good news for brands as it makes it easier to reach costumers. “More than 90% (93%) of smartphone users use apps.” (Ipsos.com, 2018)

Another trend cycling companies should be aware of is increasing electric transport. “IHS, a market-research firm, predicts that annual sales of battery-powered electric vehicles (EVs) and hybrids will increase from about 2.3 million units in 2014 to 11.5 million by 2022, or 11 percent of the global market.” (McKinsey & Company, 2018). Demand for E-bikes will boost and is believed e-Bikes sales will strongly increase over the next coming years. “E-bikes are positioned to be a primary benefactor of this trend since they are low in cost relative to cars.”(Emubikes.com, 2018)

Responses:

Investment 1:

The first investment Evans cycling industry should consider developing a share trade with China. Looking at the business perspective this would mean they are purchasing a bike or bike details for a lower price. A smart move would be to think about placing a factory in China which has a highly skilled cheaper workforce as well as expand their business there as China is one of the biggest consumer markets in the world. “Cheap Chinese labor has been crucial to the building of “Factory Asia”, the name given to the region’s complex of cross-border supply chains.” (Economist.com, 2018)

Investment 2:

Another investment Evan Cycles company should think through due to big competition is to release a personal app that not only show bikes that you can purchase, but also create an opportunity to rent bikes for people who don’t want to invest in a good bicycle, but would like to enjoy cycling from time to time. This would include a map which shows the user the closest shop stations to them in the city they are in. Releasing an app is another way of reaching new potential customers and giving old customers a new platform. “Smartphone users are spending more time in apps than in years past, and now access over 30 apps on a monthly basis” (Perez, 2018)

Investment 3:

The third investment Evan cycles should invest in over the next 5 – 10 years is electric bikes. It attracts a wider demographic of cyclist “In particular, there was a high representation of women amongst the riders, a group who are otherwise difficult to reach: 45% of e-bike riders were female” (Carplusbikeplus.org.uk, 2018). As well as considering the aging population this product would also appeal to older age people helping them to travel easier and be more active.

Due to a new set of vehicle excise duty bands and increased tax people maybe consider the new traveling ways and e-bikes are closest to a car as well as shifting from car to e-bikes Is a good way to reduce air pollution and carbon emissions.

Investment 4:

Another investment that company should consider of doing in the next 5 -10 years is present a petition to authority and work with local councils to try and create many more cycle lanes for bigger cities in England. To expand cycle lanes, routes in city centers reducing cycling accidents. To consider building and improving cycle facilities at railway stations “cities which have a dense cycle network (cycle facilities of up to one-third of all roads), have achieved substantial increases in cycling levels. It is notable that success has been achieved in a variety of cities with a range of climates, land use densities, and topographies.” (Its.leeds.ac.uk, 2018). To consider building and improving cycle facilities at railway stations

It is very important for companies to use pest as one of the tools to understand macro-environment and the changes that may happen within a given market. These changes can influence relationships and marketing that they have worked hard for. A Pest analysis plays a big part in influencing a company’s future decisions, it allows organizations to identify potential obstacles in advance so they can be avoided or planned for. Those who have business in a foreign country this analysis is extremely valuable and will enhance the level of success they will be able to achieve.

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