This paper illustrates that the political, economic, social and technological factors are influence a firm’ s performance in the short run as well as in the long run. Strategy consultants use the acronym PEST, to denote these four factors. PEST analysis is useful in judging the macro environment in which the firm operates. Such a method of analysis is made separately for each branch of the firms that operate across geographical borders since the political, economic, social and technological factors differ in each country. The results obtained from this analysis can be used for business planning, strategizing, product development and further research and development.
Political factors affect the business decisions and performance of the firm to a large extent. C& J Clark is a family owned business that owns a prominent place in the British footwear market. In 1992, while the company was going through a tough time, it faced a fall in profit. The company had to cut its dividends when a family dispute surfaced demanding ouster of the-then chairman Walter Dickson, who was a non-family member. The company also had considered going public in the later part of the 1990s.
However the company began to recover in the mid-1990s, and since then the profits have not seen a downfall. In 2010 Clarks has made a huge profit of £ 125 million and stands as the fourth largest shoe manufacturing company in the world. The economic condition of the economy in which the company operates affects the sale of products. Whether the economy is going through a boom or is suffering a recession, it affects the consumers’ expectation about the economic condition of the near future and their spending behavior.
Both national and global economic factors affect any business and decisions must be taken accordingly. Clarks caters to the market comprising customers of every age group in different countries. Thus it is important for the management to examine the population growth in these countries and keep themselves up to date with the preferences of these people.
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