PEST analysis for the car industry

Essay by s0109930University, Master'sA, February 2007

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Research question/Purpose

The Car Industry is changing its structure quickly. While Toyota earned some 124 billion SEK last year, GM lost about 65 billion SEK. Many mergers have happened and more changes are bound to happen. Write an essay pointing out the PEST-factors you find having a strong impact and causing these changes in the car industry. Also, reflect on the changes you think will happen in the years to come.

1.Introduction [1]

PEST analysis is a process of checking and analyzing information relating to the environment. The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business as a business measurement tool. It involves monitoring the changes taking place in the environment and forecasting the future position. The PEST analysis could be a framework reviewing a strategy or position, direction of a company, a marketing proposition, or idea.

It helps the firm to formulate its corporate strategy in line with the opportunities emerging in the environment. Strategic response to environmental changes is the end purpose of PEST analysis. PEST is made up of the first letters of the four key factors: political, economic, social, and technological factors. It assists in identifying the key environmental influences, predict the changes in environment, and understand the interconnections between influences pertaining to macro environmental factors and environmental factors specific to the industry. Most industry firms would carry out a PEST analysis to assess the prospects of their business and viability of their investment.

Specifically, these four PEST factors cover all aspects of external environmental analysis. Political factors changes involve government rules such as on planning. Economic factors changes include the health of the economy, how likely people are to be able to afford property, and changes such as...