Pestel Analysis, Political and Legal Factors - Research Paper Example

?Pestle Analysis Analyzing the macro-environment factors of a business is an important part of strategic business management. This enables the business managers to identify factors that might affect important variables in an organization such as demand and supply. Changes in the macro-environment of a business are caused by the radical changes that characterize the modern society (Grant 65). A pestle analysis is the most appropriate tool applied in the analysis of external business environment. The analysis provides a framework on how political, economic, social, and technological factors determine a business environment. This essay will therefore present a pestle analysis for college Hunks Hauling Junk Company. Political and Legal Factors The government has interests on how businesses are run. This interest is experienced through direct and indirect control of business by the government. Political and legal processes in a country are the main channels through which the government influences an industry. The government has interest in the running of business due to its social responsibilities. In particular, the federal government, local author and state governments have an interest in the junk industry due to their assumed responsibilities. The risks associated with the junk business are the main cause of government’s interest in the industry. Such risks are concerned with the safety of the employees as well as the environment. In response to the need of protecting the environment and people, the government has established the relevant legislations and policies. These laws and policies form the legal factors that affect the industry. The Environment Protection Act was specifically established to protect the environment from harmful effects resulting from uncontrolled business practices. This Act has provisions that regulate waste management, recycling, and disposal. Such policies will have an effect to the company that will be felt through regulations on its business. Protection of employees from exploitation by employers is the responsibility of the government. The junk industry is labor intensive and therefore employees form a major part of junk companies. Employment laws of the United States are applied by the government to regulate employment with emphasis in protection of employees from exploitation. The company is therefore expected to be conversant with these laws and their implication in the business. The junk industry has disposal of wastes as a major part of their day-to-day operations. Companies in the junk industry are also involved with recycling as part of their strategic management. Recycling and disposal of waste are processes of interest to the authorities especially the local government. In response to the two activities, the government has established environment protection measures through relevant laws and policies. The legislations and policies are mainly concerned with the disposal and recycling of hazardous wastes. Due to its operation scale, College Hunks Hauling Company needs to consider these legislations and policies. Economic Factors Economic factors in an industry are factors that determine a business’s rate of success in the industry. These factors affect availability of capital, operation cost and the demand of a company’s products (Grant 95). Consumption is an important process in sustenance of business and therefore factors that affects people’s consumption affects business operations. The disposable income of a country gives a measure on how much the consumers are able and ready to spend at a particular time. The company will therefore be affected by the variations in the consumer’s consumption power resulting from the level of disposable income of a country. Currently, the United States’ level of disposable income per household is slightly above 10%. This is a significant figure compared to the current taxation rates and the spending rates experienced in previous years. The junk industry depends on the rate at which people replace their old and worn out equipment and facilities with new ones. This indicates that the consumption power of consumers has significant effects to the industry. The consumption power is closely related to economic growth trends in a country. Currently U.S economy is recovering from the recent recession and this has an implication to power of consumers. Although the economy has not yet reached a boom, the consuming power is on a positive trend. The economic environment of a business also includes indirect factors such as inflation, tariffs, and exchange rates. With the current market trends, U.S monetary authority has been forced to vary its tariffs. This has resulted in inflation and the lowering of the price of the dollar. Inflation rate and tariffs affects the business ability to acquire capital. The hauling industry is a capital-intensive industry and hence the company will be affected by the availability of capital. Social Factors Social factors are ways of life that affects the day-to-day running of business. Social factors include demographics, lifestyles, fashions, education, and the living standards. A combination of these factors influences how businesses in the United State are run. The United States is moving towards an ageing society, the society is currently the most diversified society in the world due to its diversification in terms of races and cultures. Companies looking forward towards success in the junk industry should be sensitive to the country’s social trends. Junk company’s deals with what people considers as wastes and therefore a highly consuming and disposing community is the most attractive to the company. Social trends in a society determine its rate of consumption and disposal. The Afro American culture is associated with the consumption and disposal culture and therefore the company has a brighter future. The U.S society is also experiencing an increase in the number of working class women and this implies an increase in consumption rate. The expected increase of consumption resulting from improved earnings will increase the rate of consumption and disposal. The current social trends have different implications to the company and its success will depend on the favorability of the trends. Technological Factors The U.S economy is highly dependent on technology, this is due to the number of discoveries and inventions that are made or applied in U.S. This implies that a successful company in U.S economy needs to have the relevant technology. The junk industry is a highly mechanized industry implying the need to have modern efficient equipment. The availability of equipment in a company will therefore determine its rate of success in the industry. The company should therefore consider having modern equipment and facilities to facilitate its service delivery. Information systems are rapidly replacing traditional transaction record keeping processes due to the associated efficiency and benefits. For a company to achieve success in the modern market, it needs to consider application of the new information and management systems. The shift towards information technology has greatly influenced the running of modern businesses. Electronic commerce is a major characteristic of modern business. Businesses in the current U.S market are concerned about establishing e-markets in additional to their existing real market (Grant 105). E-commerce enable businesses to market their products to customers without requiring them to come into the actual business premises. The technological advancement and availability of the internet has exposed the potentials of e-commerce making most businesses to consider its application. Environmental Factors Environmental factors in an industry are the immediate factors that affect a firm’s ability to achieve success in the industry. These factors determine the ability of a company to realize profits required for growth. College Hunks Hauling Junk company therefore needs to have knowledge on competence of related firms. The company needs to identify their weakness as well as their strengths. Learning the weakness and strengths of related firms will enable the company to device appropriate success strategies. The company will find information on the weaknesses of competing as the most useful. Such information will provide the company with important business potentials that it can utilize. Works Cited Grant, Robert. Contemporary strategy analysis: concepts, techniques, applications. London: Blackwell Publishing Company, 2002. Print. Read More