Pest Analysis

PEST Analysis

A PEST analysis is an analysis of the external macro-environment that affects all firms.P.E.S.T is an acronym for the political, Economic, Social and Technological factors of the external macro-environment. It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

The organization's marketing environment is made up of:

The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.

The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

How to write a good PEST analysis?

PEST analysis incorporates four perspectives, which give a logical structure, providing clear presentation for further discussions and proactive decision-makings. In writing a good PEST, subject should be a clear definition of the market being addressed, which might include the following issues of:

* a company looking at its market

* a product looking at its market

* a brand in relation to its market

* a local business unit

* a strategic option, such as entering a new market or launching a new product

* a potential acquisition

* a potential partnership

* an investment opportunity

Before producing a good PEST analysis, it is of primary importance to, firstly, brainstorm the relevant factors that apply to the company or to its business environment. Second requirement is to identify the information that applies to these factors; and thirdly, to draw conclusions from this information. It is, however, necessary not only to describe factors, but to think through what they mean and how they impact the business. PEST analysis is only a strategic starting point, and has its own limitations, emphasizing the need to test the conclusions and findings against the reality.

Technical factors the influence industry:

Networks are one of the most technical aspects of any country and the technological changes affecting the networks have changed considerably, since the first & last landline company PTCL was introduced in Pakistan.

Ufone is also a product line of PTCL. Its promoter, the GSM Association, estimates that 42% of the global mobile markets use the standard. Its ubiquity makes international roaming very common between mobile phone operators, enabling subscribers to use their phones in many parts of the world. GSM differs from its predecessors in that both signaling and speech channels, which are digital, and thus is considered a second generation. (2G) mobile phone system. This has also meant that data communication was easy to build into the system. GSM also pioneered the short message service (SMS), which is now supported on other mobile standards as well; Most GSM networks operate in the 900 MHz or 1800 MHz bands.

Currently all mobile networks of Pakistan entered the 2.5G, by implementing the General Packet Radio Services (GPRS). It is a packet oriented mobile data service available to users of GSM. GPRS can be used for services such as wireless application protocol (WAP) access, Short message service (SMS), multimedia messaging service (MMS), and for the internet communication services such as email and world wide web access. Later on, enhanced data rates for global evolution (EDGE) was introduced, EDGE is an upgrade that provides a potential three-fold increase in capacity of GSM/GPRS networks. Although EDGE is a 3G technology, but it is considered as a part of 2.5G technology, however sometimes separately referred to as 2.75G.

Currently the ufone company is planning to launch 3G licenses in Pakistan, starting from the end of 2008. 3G networks enable network operators to offer users a wider range of

more advanced services while achieving greater network capacity through improved spectral efficiency. Services include wide-area wireless voice telephony, video calls, and broadband wireless data, all in a mobile environment. Additionally features also include HSPA (High Speed Packet Access) data transmission capabilities able to deliver speeds up to 14.4Mbits/s on the downlink and 5.8Mbit/s on the uplink. Furthermore 3G networks offer a greater Degree of security than 2G predecessors.

In conducting PEST analysis, it is required to consider each PEST factor as they all play a part in determining the overall business environment.

1. Political Factors:

The political area has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. The government plays an important role in the operation and manufacturing products and Services in terms of regulations. Following are some of the political factors:

Due to the unstable political and governmental environment rules and regulation are changed quite frequently. Government has increased the taxes in the telecommunication sector that will also a harder in the smooth operation of telecom operation.

Before WTO implementation for deregulation of different sectors of the economy. Pakistan government has taken the step to regulate the telecom sector by the authority of PTA. There are two types of Regulators held by PTA; the first is called the

o Economy Wide Competition Regulator

o Monopoly Control Authority

Due to the regulation authority of PTA the political governmental rules not completely applicable in this sector.

There is political instability in Pakistan now a day this instability has led to uncertain environment in the country, which is a threat for any business including all the companies of the Pakistani Telecom Sector.

Environment of telecom is investor friendly and have great potential to gain profit. The mobile phone density which had reached to 58.70 by the end of February 2010. In Pakistan, the total number of subscribers which had touched an all-time high figure of 96,231,229 in February 2010.

Pakistan faces budget deficit and low economic growth now a day. Due to these circumstances