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Chapter 17 - Coggle Diagram
Chapter 17
PEST
Economic
During an economic boom they might want to open more shops and make more money that way or employ more people to maximise this time period
If there were an economic crash then they would have to change how they run their business via making people redundant or cutting costs via making the certain product discontinued and saving on paying suppliers.
Social
An ethical problem that can effect a business is the working environment legislations for instance Apple with their factories in China with the level of suicide and depression rates its a miracle people still buy Apple products.
Social problems these days for businesses can be demographic changes. This can be the age demographic or the area demographic these can depend on the local income of the area depending on whether they would set up a business there or not.
Ethical problems can be a major contribution to the failure of certain industries for instance Amazon with their constant supply of environmental legislations if its about the amount of CO2 produced by the vans they transport goods in or the actual raw materials they use.
Political
Political factors contain the taxes and tariffs that a business has to pay in order to maintain the government guidelines. An example of the tax they have to pay would be corporate tax which is 20% of all the takings of a business. There are some places where you don't need to pay these taxes like the channel island of Jersey.
Another point that could go into political factors are the guidelines and the government legislations that go into the EU for instance the trade barriers and the different currencies.
A change in government could also effect the business for instance if a more socialist party got into power they might introduce a higher tax on businesses that have investment in environmentally unfriendly businesses for instance Pepsi and their use of palm oil which could negatively impact businesses due to the cut in the profits of the businesses because of the added cost of the tax.
Technological
A network issue could be that too many devices are connected to the internet and are using it at the same time this can be solved by most large organisations using a leased line connection.
A technological problem can be the technological divide with people in their organisation not being able to use certain technology for instance some people not knowing how to use excel this can be a massive problem.
Technological factors can be the PCs the business are using are awful or it can be a network problem these problems can be solved with the likes of Virtualisation tech which make the worst laptops in the world be able to run any game on the planet. Avoiding the revamp cost of upgrading the PCs
European Union
European monetary union the single currency act was launched that is why most Europeans use the Euro and not their own currency other than the likes of Scandinavia and the UK not many other countries use their own currencies. An advantage of using the Euro is that they don't need to worry about their economy failing the price of the currency would stay the same.
Growth of the EU when it expands it creates new business opportunities. Businesses need to be aware of the cultural, economic and legal structures. Some Eu members have moved production to the new members instead of the originating members that pay the most into it like the UK
Single European market means that people can move goods throughout the parts of Europe in the EU free of charge and can move without Tariffs or passports.
Central Government
Competition policy. Any business with more than 25% of the market share is classed as a monopoly this is why the government intervened when the Asda Sainsburys merger was going to happen because they would have 35% of the market share.
Privatisation and deregulation this was mainly in the 80s and 90s so doesn't really matter now and its is controlling the business in the private sector and selling the shares.
How much the government changes the economy is up to them they can change how much they are involved in depending on the merits of doing so, for instance the amount Boris Johnson rants on about the economy this year he has been very involved in the management of the economy