PEST analysis example - Essay Example

PEST analysis factors

The aim of this paper is to explain how optical practices and industry are affected by numerous factors with regards to the PEST analysis. PEST analysis is the process of outlining the external factors that affect the smooth running of a business or an organization. Broadly, these factors include:

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i. Political factors

ii. Economic factors

iii. Social factors

iv. Technological factors

These factors can be dealt by identifying the opportunities and the threats in the SWOT analysis. Opportunities and threats are the external factors that determine how a business is forging ahead in the market with regards to the competitors. SWOT analysis stands for Strengths Weaknesses Opportunities Threats analysis. Combining both PEST and SWOT analyses will so much help a business realize its success in the market.

PEST Analysis Sample

The grid below shows various external factors that affect optical sector.

1. Political

1.1 The Government

1.2 NHS Budgets

1.3 Healthcare Regulation

2. Economic

2.1 Economic crisis

2.2 Interest rates

2.3 Inflation

2.4 Redundancies

2.5 Customers

2.6 Competition

2.7 Little marketing activity

2.8 Investors

2.9 Taxes

3. Social

3.1 Lifestyle trends

3.2 Fashion

3.3 Local trading conditions

3.4 Exposure

3.5 Local population mix

3.6 Insecurity

 

4. Technological

4.1 Computer Technology

4.2 Frame and lens materials

4.3 Contact lenses

4.4 Laser surgery

4.5 Internet systems

1. PEST Analysis Political factors

1.1 The Government

The government can set rules that affect the optical sector both directly and indirectly. The rules will always have to force a necessary change that will have an effect on both the industry and the country at large (Yeoh and Koronois 2010). The consumers of the services provided by the optical industry will always determine the legitimacy of the rules imposed by the government by either accepting them or denying them (see Appendix b).

1.2 NHS Budgets

The probable way through which NHS affects the optical sector is via General Ophthalmic Services (GOS). Any patient who has his or her optical care under NHS is seemingly a private patient because for him or her to get access to his or her NHS sight test, it is mandatory that he or she must have a GOS1form which is later retained wherever the sight test is going to be done.

1.3 Healthcare Regulation

The governing and professional bodies of the optical sector will always have their own terms and conditions in limiting the number of optical firms in the industry. Any optical firm that is found not to comply with the set terms and conditions will suffer the loss of being closed.

2. PEST Analysis Economic factors

2.1 Economic crisis

Every business is always affected by the prevailing economic state of the country. When a country suffers an economic crisis, then it’s most likely that the businesses will be affected negatively. Optical industry being part of the economy should be prepared whenever an economic crisis comes along.

2.2 Interest Rates

The value of interest rates will always is indirectly proportional to the rate of sales by the optical sector in that when the interest rates are low, then, there will be more sales made by the optical sector and vice versa. Low-interest rates will always attract more people. Creditors of the optical sector also have a role in playing as far as interest rates are concerned in that when they set high-interest rates for the optical sector, then, the activities of the sector will be derailed thus having an impact on the health care management of the country or the locality that is affected.

2.3 Inflation

The loss of value of a currency by the optical sector due to increase in the prices of goods impacts on the effective selling of optical products by the firms. High prices of optical equipment make it hard for new equipment to be acquired in the optical sector thus barring many operations that require the equipment from being accomplished.

2.4 Redundancies

Lack of interest in using optical instruments will always remain a big blow to the optical sector due to lack of customers. People are becoming tired of having to go for the same sight tests and checkups that make no difference in their visual defects. Rather, they have decided to take it upon themselves to see their sights restored back to normal without the help of opticians.

2.5 Customers

For any existing business to be successful, then, there must be an availability of customers. Without this, the business will experience gross losses which will later lead to its closure. Finding the most appropriate and easier way of attracting customers will always save a firm the risk of it being closed due to the failure of conducting sales. Internal factors such as promotions will attract customers that are tight on their budget as they are always on the lead to tarnishing a firm’s image in case they are offered raw deals.

2.6 Competition

Competition remains to be the most inflexible factor that influences the activities that take place in a certain market or industry. Every firm will always be ready to do whatever it takes to lead the scoreboard based on competition. Competition always leads to the production of poor services and goods which later has an influence on the entire economy at large. The optical sector must be ready to counter the extreme ends which their competitors grow in terms of innovation and invention. The services offered to consumers must be so attractive to them not to allow them to have second thoughts regarding the sector in relation to the services offered by the competitors. Competition is the only indication that an industry is growing and whenever a firm is challenged by other competing firms, then, it has no choice other than initiating the necessary changes to keep pace with the competitors.

2.7 Little marketing activity

There is no much awareness about the existence of the store in various platforms to which the customers have access to. This bars a product from being widely sold or known to parties that might be interested in acquiring the products. A business in the current economy will so much depend on how diverse it’s known to the public in that when the business offers great services to its consumers, then, the patients will extend the message to their friends and the friends spread the message about the business to their other friends and the cycle continues. This later augments the sale and also may lead to international and broad recognition of a business firm (Protess and McCombs 2016).

2.8 Investors

Investors always make sure that the activities of the firm are smooth running and nothing which the firm requires is missing. Lack of investors will always leave a firm vulnerable to risks of closure when in debts and also inhibit firms from acquiring loans when the urge for the loans is high. Investors can also enhance foreign exchange which will make the sector to be diverse in terms of recognition and marketability. The optical sector can use its investors to help acquire the most expensive optical instruments that would otherwise help to undertake surgeries such as laser eye surgery; this will reduce the number of patients going abroad to countries that are equipped with the necessary equipment that are required. The type of investors must be eliminatory as not all investors will be investing in for the success of the optical sector. Some investors only invest to later see the optical sector go down due to various unavoidable circumstances caused by them.

2.9 Taxes

Imposing high tax rates on various sectors of the economy hinders the progression of the various sectors as this reduces the value of cash sales made by the sectors. Ultimately, the economic development of the country also reduces when the tax rates are high.