It is a part of the external analysis when conducting a strategic analysis or doing market research and gives a certain overview of the different macro environmental factors that the company has to take into consideration. Political factors: how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. The political factors in the United Kingdom have a great influence on the performance of Sainsbury. Currently in UK, the government debts and the consumer debts are very high.
The Economic factors are determinants of an economy’s performance that directly impacts a company. These factors include inflation rates, interest rates, exchange rates and economic growth. These affect how businesses operate and make decisions. The economic climate in the country is of major concern to every company as it has impacts on the business and consumer spending. For example, the exchange rates can affect the costs of the supply and price of imported goods and exporting goods in an economy.
There are various things are kept in mind before devising a pricing strategy such as component’s price, staffing cost, advertising cost, distribution cost and designing cost. When it comes to going internationally, the strategy gets too much complex as it involves foreign currency transactions which may give rise to gain or loss on foreign currency transactions. If there is a treasury department, it needs to play its active role under this situation to keep the company in a profitable situation. Otherwise, the dream to go international will be a nightmare which a company like Bombardier will never like to happen in its
PESTLE Analysis Political : Political factors internationally have effect on Starbucks businesses and their profits . Taxes to business environment is affected by politics, but the main political factor is about sourcing the raw materials and so it has gathered a lot of attention from politicians from the source countries. For the reason company wants to obey the social and environmental standards also there is a deep link between political and economic stability. More the politically stable the nation is the more economic environment. They also have tax policies and regulatory pressure on them.
Target is impacted by an external environment as much as they are affected by other competitors such as Walmart and Costco. Legal, political, economic, technological and social are the global factors that influence Target. Here are how these factors can impact Target if they expand and operate their business in the United Kingdom. 1. Legal factors may influence the Target's execution in different cases.
There are several elements concerning the external environment which include: political elements, economic elements and the cultural elements as well as a variety of other factors that would influence the accounting system along with the accounting reporting system. Influence of Political Elements: Political elements are often associated with government rules and regulations that have a deeper impact on the accounting statement itself. Any alteration that may occur in the rules and regulations of the government would directly affect the financial reporting. Consider the case of the improvements of the tax rate of the earnings of the companies which would certainly have an affect on the financial reporting. Another case that should be considered
Organization may charge more money to customers for their products and services. If government imposes low taxes, firms want to invest for many sectors which create job for people. Central bank controlled the monetary policy. Monetary policy has effect not only on the business organization but also the entire economy. It is the ability to obtain credit.
Part A Macro environment is important factor affecting the development of enterprises. A macro environment is the condition that exists in the economy as a whole, rather than in a specific sector or region. (Macro Environment n.d.) Cultures, politics, technology, nature, economy and demographic are the six major forces in the company 's macro-environment. (Kotler & Armstrong 2014, p96） Political factors Political factors include government regulations and legal issues and define both formal and informal rules. (PEST Analysis n.d.) All the companies have to follow these rules.
Input uncertainties can result from the fluctuations in consumers’ demands which will shift the market supply for producers. From an international perspective, input uncertainty is interrelated to the general environment uncertainties (Millers, 1992). The uncertainty of consumption patterns and demands of the output produced by the firms are known as product market uncertainty. The unpredictability in the change in trade policies in domestic and international markets result in a direct impact on product market uncertainty. Porter’s five forces (Venter & Louw, 2012) is usually a tool used by organisations to predict competitive uncertainties.
The study of Yazid and Muda shows that multinational corporations are involved in the management of foreign exchange risk mainly because they try to control the overall cash flow by the currency fluctuations. Another discovery of the role of foreign exchange risk management in Malaysia is most multinational companies focus on risk management activities, while more control networks have been applied for frequent reporting of derivative activities. As the foreign exchange market is still unstable, it is advisable for multinational corporations to actively