Assignmentmanagement controltopic pest analysis and its applications in management control

Disadvantages of PEST model...8 III.Applications of PEST analysis in management control activities...9 IV.. What is PEST analysis model?PEST is a management method whereby an organizatio

NATIONAL ECONOMICS UNIVERSITY SCHOOL OF ACCOUNTING AND AUDITING

-*** -ASSIGNMENT MANAGEMENT CONTROL

Topic: PEST Analysis and its applications in

management control

Hanoi, 3 rd October 2020

TABLE OF TASKS FOR THE MEMBERS OF

THE PRESENTATION TEAM Numbe

1 Nguyen Thi Kieu

Trinh

11185284 Auditing

60A

- Responsible for finding out information, analyzing detailed content.

2 Nguyen Le Hai Dang 11186224 Auditing

60A

- Responsible for the content.

- Complete PowerPoint design.

Phuong

11184041 Auditing

60A

- Review errors and summarize content.

- Presentation.

ACKNOWLEDGEMENTS 4

I What is PEST analysis model? 4

1 Political Factors 5

2 Economic Factors 6

3 Social Factors 7

4 Technological Factors 7

II Advantages and disadvantages of PEST model 8

1 Advantages of PEST model 8

2 Disadvantages of PEST model 8

III.Applications of PEST analysis in management control activities 9

IV Example 9

1 Political factors: 9

2 Economic factors: 10

3 Social factors: 11

4 Technological factors: 12

5 Opportunities, challenges, solutions: 12

QUESTIONS AND ANSWERS 15

SOURCES 18

During the period of performing our presentation, we received a plenty of enthusiastic help and support that guide and encourage us to overcome all difficulties and finish this hard but meaningful time

Firstly, we would like to express thanks to Dr Bui Minh Hai, our supervisor who gave us useful guidance and advice that help us to finish our presentation successfully From these advices we can improve our English skills in job

Secondly, we are grateful to all the lovely students of Auditing 60A for helping

us to accumulate the information and comparison so that the presentation becomes lively and multidimensional

Last but not least, we would like to thank everyone for helping us complete this presentation We have added the gaps to make the report complete We hope to receive more comments from Dr Bui Minh Hai to accumulate more knowledge and improve this presentation

I What is PEST analysis model?

PEST is a management method whereby an organization can assess major external factors that influence its operation in order to become more competitive in the market

"P" represents “Political”, "E" is “Economic”, "S" is for Social and " T” stands for “Technological” These 4 objective factors have a strong impact on every business Therefore, corporations need to analyze them carefully to come up with strategies that are suitable for the business development

1 Political Factors

The political aspect of PEST usually focuses on the areas in which government policies and changes in legislation affect the business Some areas that can be considered include: Political Stability, Relevant Statutes, Tax and Employment laws, and other policies…

The general political climate of a nation as well as international relations, can also

greatly influence the organization

Some aspects could be analyzed:

 Political stability: What kind of government and the degree of stability of

the political environment as well as legal institutions? Usually, Political institutions with high stability will be able to create good conditions for business operations In contrast, unstable institutions are prone to cause confliction and negative impact for the businesses in that region



 Relevant laws:

- What impact do Laws such as Investment law, Corporate law, Labor law, Antitrust law, Anti-dumping law, have on the business? For

example, businesses must comply with the Enterprise Law, and the use of labor must comply with the Labor Law, …

- Are there any laws that are amended? Or about to be enacted or repealed?

 Tax policy: How do Export, import tax policy, consumption tax, income

tax affect the businesses? In general, the profits of enterprises greatly depend on state's tax policies

 Other policies:

- What are the government's policies on the country's economy? What influences do those policies have on businesses?

- State policies can create opportunities or challenges for businesses Some policies can be mentioned: trade policies, industry development policies economic development, taxation, competitive control policies, consumer protection

Example: In countries with frequent political conflicts or factions, such as

Afghanistan, SriLanka, Syria, all have very low economic growth rates Almost no foreign firms invest in these areas Meanwhile, it can be seen that in Vietnam, since the country went into stability, the economy has continued to grow Moreover, the foreign investment in Vietnam is booming too This will create many opportunities for businesses in Vietnam One of the reasons for this economic growth is the political stability of the country

2 Economic Factors

Businesses need to pay attention to economic factors both in the short and long term In which, special attention should be paid to the government's intervention in the economy Usually, businesses will rely on the analysis of the following economic factors to decide the strategies:

 Status of the economy: Is the economy in a period of development, stagnation or recession?

 Conditions of the economy: Does the level of customers’ income increase

or decrease? How will this change over the next few years? What is the unemployment rate? Is building a skilled workforce feasible or will it be expensive to hire skilled workers?

 Economic indicators’ effect on businesses? (Some indicators such as economic growth index, interest rate, inflation, )

 Basic wage law, economic development strategies of the Government, preferential policies for sectors: Tax reduction, subsidies

 Future economic prospects: Economic growth, inflation and interest rates, the possibilities of changes in technology or economies

Example: High interest rates can hinder investments because businesses have to pay

more for borrowing In addition, high interest rates make consumers tend to save more than spend, so consumption demand decreases

In general, if the national economic growth rate is high, the Government policies encourage enterprises to invest in production expansion, inflation is kept at a

Discover more from:

CNTT1123

Đề cương Vật Lý ĐC - Đặng Đình Hải

Tom tat ly thuyet Vat ly dai cuong

Bài thực hành vật lý 2 , nhóm 3

FILE 2022011 5 185230 ĐỀ-ÔN-SINH-9-DT-CHỌN-GIỐNG-VÀ-DT-NGƯỜI-15-1-2022

gõ ký tự theo latex trong word

Document continues below

Vật lý đại cương 1

188 documents

Go to course

19

16

28

4

4

reasonable level and consumers’ income increases ., businesses will have many chances to improve production efficiency

3 Social Factors

Each country has its own cultural values and typical social factors And these factors are the characteristics of the consumers in those regions The aspects such as Demographics (population growth, age structure), religions, customs and habits, and especially social security, affect the total demand for a company's products and services, and decide how the company will meet the needs of its customers

 Demographics: What are the growth rate and age structure of the

population? How might these elements change?



 Religions and beliefs: What are the religions in the invested countries?

What should be taken into consideration about those religions?

 Customs and habits: How have business culture, consumption habits,

lifestyle, and social culture changed? What are the aesthetic and psychological point of views?

Example: Vietnam is now in the period of golden population structure with the

largest percentage of young people ever, it is forecasted that by 2049 the working population will account for 64,42% Therefore, a strong young workforce will create opportunities for industries that need a lot of manpower such as construction, tourism, Or another example: In India, many people don’t eat beef due to the religious belief of Hindu Thus, if a company wants to run a food business in India, administrators should definitely take this into consideration

4 Technological Factors

The whole world is still in a technological revolution A series of new technologies are introduced and integrated into products and services everyday Technology will affect barriers to market entry, minimum productivity levels, and considerations for self-production or outsourcing In addition, technological elements also influence the cost and quality of products and services As a result, innovations are inevitable Some aspects can be considered:

 How is investment of the Government and enterprises in research and development (R&D) like? Which areas do governments and educational institutions focus on? What can businesses do to take advantage of this?

 The speed, the cycle of technology and the rate of outdated technology The effect of technology transfer

 Is there any new technology going to be released that could have a big impact on the industry of the business?

 Can any competitors use new technologies to completely innovate their products?

 The impact of Information technology (IT) and the Internet on business?

Example: Enterprises are constantly innovating and applying technological

achievements to their products, including Apple For instance, the iPhone 11pro, which was launched in 2019, has made significant improvements in technology such as dual

FILE 20220530 144453 84 Đề thi thử tốt nghiệp THPT năm 2021-2022 môn Toán - ĐGNL ĐẠI HỌC SƯ PHẠM HÀ NỘI (LẦ…

20

wide-angle camera, 4k video recording support, and Super Retina XDR screen, and many other utilities

II Advantages and disadvantages of PEST model

1 Advantages of PEST model

 PEST is a simple and useful tool It not only gives administrators a comprehensive view of the operating business environment, but also supports the process of decision making

 PEST analysis helps to understand the operating environment to detect potential opportunities and threats, thereby taking advantages of opportunities and reducing hazards

 It also helps administrators to understand how the business environment is changing and to prepare for the long-term plans in the future

2 Disadvantages of PEST model

Besides the advantages, PEST model still has many limitations:

 Firstly, the external factors in PEST model change continuously Sometimes these changes take place in less than a day, so it is difficult for planners to predict why and how these factors may affect the business In many cases, these changes can be noticed, but sometimes they are unnoticed in the early stages which cause serious consequences on the outcome of the business strategies

 Secondly, the simple structure of the model is also a limitation For PEST analysis, normally the analyst presents only a list of macro environmental factors Except for some factors that have a big impact on a specific business, the analysis often does not bring much results To fit the needs, the current PEST model has been expanded into some matrices such as:

- SLEPT: Including “Legal” element

- PESTEL / PESTLE Law: Adding “Environmental” factor

- STEEPLE Environment: Adding “Ethics” Factors

- STEEPLED Ethics: Including “Demographic” Factors

- DESTEP: Adding Demographic and Ecological Factors

- If people want to adopt this model on a local, national or global level, they can use another variant called LONGPESTEL - Local, National, Global, Political, Economic, Social, Technological, Legal and Environmental analysis

 Thirdly, the data collection related to the external environment is often difficult This makes the analysis of the PEST model both costly and time-consuming Additionally, the latest data updating is always a problem in PEST analysis Lacking of updates can lead to many assumptions

 Fourthly, proper PEST analysis requires a lot of information to collect and when too much information is processed, businesses are often confused in determining which factors are important and that can lead to serious mistakes

 Finally, PEST analysis is not enough for business strategy planning because it only cares about the external environment but ignores the internal ones PEST needs to be combined with other analysis such as SWOT or Five Forces to have a better support for the business

III Applications of PEST analysis in management control activities

 PEST Analysis can assist an organization in recognizing and thereby taking advantage of opportunities offered by existing conditions in the business environment It can also be used for identifying current or possible future challenges, which allows enterprises to have effective plans

of how to best manage these challenges

 PEST Analysis can also be applied in assessing the in-house structure of

an organization in order to identify strengths and weaknesses in its internal politics, economic outlook, social climate, and technology base The results of this analysis can facilitate changes or improvements in businesses

 PEST Analysis can be used in conjunction with other forms of strategic business analysis, such as SWOT, or Five Forces, for an even more comprehensive result Conducting a comparison among these completed analyses can provide a very solid basis for informed decision-making

IV Example

Company: Heineken Vietnam Brewery Co., Ltd.

PEST Analysis in the Product Development Strategy

HEINEKEN Vietnam is a subsidiary of HEINEKEN, the world’s most international brewer has grown to be the second largest brewer in Vietnam with more than 3,500 employees from a humble number which was 20 at the beginning in Vietnam

1 Political factors:

The legal system affected businesses is increasingly developed Investment Law, Enterprise Law, Labor Law, Civil Law, … all contribute to support Heineken Vietnam

in the process of formation and development Therefore, businesses need to continuously update the changes in order to set a reasonable direction Moreover, Antitrust law, intellectual property rights, patents, will create healthy competition opportunities for companies in the industry

The current development of consumer protection groups will be a threat to companies as this will force companies to take more responsibility for product safety, honestly and culturally appropriate advertisement,

Since the excise tax on beer is very high, Heineken's revenue will heavily depend on these tax policies And everything from the ingredients to the labels on the cans must be approved before the product can hit the shelves