MGT211 Introduction To Business Assignment 1 Solution Spring 2013

Case:
Ali and Hassan are Master of Business Administration degree holders and they want to establish a new business in Fast Food Industry in partnership with the name AH Hot & Spicy Fast Foods. For this purpose, they made analysis of different market situations of this Industry; also for their business they analyzed different environments in which a business works that social, technological, political and economic. They are full of team spirit and having good technical skills and abilities to work and run the business.

After analyzing the market internal and external factors, they received basic knowledge important for any new enterprise. Finally they decided to start the business in Islamabad.
Requirement:
Perform a PEST analysis for AH Hot & Spicy Fast Food.

Solution:

PESTLE stands for “Political, Economic, Social, Technological, Legal and Environmental” and is used for business and strategic planning, marketing planning, organizational change, business and product development and research reports.
By understanding these external environments, organizations can maximize the opportunities and minimize the threats to the organization.

PEST Analysis AH Hot & Spicy Fast Foods

The various Political, Economic, Social and Technical factors that a firm needs to consider and research in order to enter the restaurant business in a new environment may be depicted as follows:-

Political Factors:
Government regulations regarding hygiene, health and food regulations, food standards, etc.
Economic policies of government regarding the restaurant industry and running eating joints; these may include licenses, inspections by Health and Food Ministry departments, etc.

Economic Factors:
Interest rate would impact the cost of capital, the rate of interest being directly proportionate to the cost of capital.
Rate of inflation determines the rate of remuneration of employees and directly affects the price of the restaurant’s products. Again, the proportion between the inflation rate and wages/prices is direct.
Economic trends act as an indicator of the sustenance and profitability of your business in the chosen region and help you in deciding your marketing strategy.

Social Factors:
Certain cultures abhor certain foods. For instance, Hindus will not eat beef and Muslims would not even touch pork. Therefore knowledge of these cultural facts about your business environment will help you decide whether or not you’ll be able to do any business there.
Eating habits of the people in your chosen business environment may, and certainly will, affect your marketing decisions.
Ratio of people preferring to eat out regularly.


Technological Factors:
A good technical infrastructure would lead to better production, procurement and distribution logistics, resulting in reduced wastage and lower costs.
Sound technology may be a decisive factor for food technology innovation, better presentation, more effective business marketing, etc.

Another Idea Answer:
 


 
P: Political environmental factors such as:

stability of the government, government type, economic policy of the government, trade policy and events in surrounding countries.

E: Economical environmental factors:

  • Higher interest rates may deter investment because it costs more to borrow. This could be a problem at the moment when we are trying to find people to invest in the project.
  • Inflation may provoke higher wage demands from employees and raise costs.
  • Increasing costs of material, storage or services used in the elaboration of the final product or service may make it more expensive.

S: Social environmental factors:

  • Increasing Health Awareness.
  • Increasing change of eating habits towards healthier food.
  • Changing Attitude from Diet products to healthy products.
  • Increasing Working women. (Nobody cooking at home)
  • Increasing Media attention and incentives towards “healthy living” from governments and organization.

T: Technological environmental Factors:

· Technological Innovations attracts people attention.

· Modernist-Technological themed places are getting more importance in consumer’s mind.

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