(a)
The five forces Model (Porter, 1980):
q Rivalry
among existing firms,
q Bargaining
power of buyers,
q Bargaining
power of suppliers,
q Threat of
new entrants,
q Threat of
new entrants,
q Threat of
substitute products or services.
Refresh your memory by looking at
CIMA: Management Accounting : official Terminology 2005.
(b) PEST analysis:
q Political/legal
influences,
q Economic
Environment and influences,
q Social and
demographic pattern and values,
q Technological
forces.
Model of the
Business environment
Although PEST
analysis is the ‘industry standard’ for macro-environmental analysis some
writers prefer the greater detail provided by a PESTEL analysis. This separates
legal from political and specifies ecological separately, for example.
Political:
q
Taxation policy,
q
Foreign trade regulations,
q
Government stability.
Economic factors:
q
Business cycles; GNP trends, interest rates;
q
Inflation; unemployment disposable income.
Socio-cultural factors:
q
Demographics,
q
Income distribution,
q
Lifestyle changes, Attitudes to work and
leisure;
q
Consumerism.
Technological factors:
q
Government spending on research,
q
New discoveries/development,
q
Rates of obsolescence.
Ecological factors:
q
Protection laws,
q
Energy consumption issues,
q
Waste disposal
Legal factors:
q
Monopolies legislation,
q
Employment law, product safety, etc.
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