Analysis Of Environmental Conditions Marketing Essay

Analysis Of Environmental Conditions Marketing Essay Analysis of environmental conditions is based on the framework put forward by Lynch (2009) that assesses the general degree of turbulence in the environment. This can be done by using the two measures of ‘Changeability’ and ‘predictability’ (Lynch, 2009, p80), which can be subdivided into complexity and novelty (changeability), and rate of change and visibility (predictability). Establishing a level of turbulence in the environment allows us to know with how much confidence we can predict the future (Lynch, 2009). In the fourth quarter of 2009 the UK GDP rose by 0.1% (www.statistics.gov.uk, 2010) which means Britain is officially out of recession. While this means recovery is under way, many analysts remain sceptical of the extent of recovery. Andrew Sentance of the Monetary Policy Committee has claimed that ‘pace of recovery would remain uncertain’ (Sentence in the Telegraph Newspaper, 2010). So, as far as predictability and visibility go, it appears very difficult to predict with confidence the extent to which the UK economy will recover in 2010, with many anticipating a slow process because ‘the economy remains weighed down by a still fragile banking sector and high consumer and government debt levels’ (Seager, 2010). With regards to Changeability and complexity, there is a general election expected in May this year and there is a strong possibility of a change of Government (www.yougov.co.uk, www.ipsos-mori.com, 2010), which will bring about a change in Government policy towards businesses, for example, the Conservative Party are pledging a cut in corporation tax. (www.conservatives.com, 2010). Adding to the complexity is the recent return to a 17.5% VAT rate that adds more financial pressure to consumers in an already struggling market. The recession may have ended but analysts are not expecting too much change in spending as ‘economic downturn is squeezing spending power and that pressure will con tinue into 2010’ (Mintel, Oct 2009). Given the reasonably turbulent conditions, organisations must change its strategies, and possibly its beliefs if it is to maintain its ability to handle changes in the environment (Thompson, 2005). So strategy cannot be made for years into the future because of the uncertain nature of the environment. Strategy should focus on the upcoming year until the turbulence reduces. 4.2 PEST Analysis PEST Analysis is a focus on the macro environment and which factors will change the external environment in the years to come. Johnson et al (p.54) states â€Å"The environment is what gives organisations their means of survival. However the environment is also a source of threats.† â€Å"The macro environment is the highest-level layer. This consists of broad environmental factors that impact to a greater or lesser extent on almost all organisations.† Therefore a good analysis of the macro environment is critical to success but should als o be as general and non-specific as possible, this leads to one of the down falls of PEST that it can be a very useful tool when analysing the macro environment but also its general nature can be its downfall if it becomes little more than a huge list of factors in a shopping list fashion.