PLEST is a strategic planning tool used to evaluate the impact political, economic, social, and technological, Legal and Environment factors might have on a project. It involves an organisation considering the external environment before starting a project. The PEST analysis is an important part of the project planning process: • Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability. • Economic factors are economic growth, interest rates, exchange rates and inflation rate. • Social factors often look at the cultural aspects and include health consciousness, population growth rate, age It is how banks and building societies make their profits – by lending at a higher rate of interest than they pay to their depositors:
High interest rates are bad for Water aid and Tesco because: • if people are paying high interest rates on their mortgages, credit cards etc. they will have a lower disposable income • High interest rates will mean that businesses will have to pay more for the loans that they take out for expansion.
INFLATION
This means RISING PRICES. Businesses generally do not like inflation because: • their material prices rise and it becomes difficult to estimate prices for long term job • their workers ask for wage increases to keep up with inflation • It becomes more difficult to sell their goods, especially exports (goods sold abroad) because they have become more expensive.
Exchange rates
Businesses of all shapes and sizes have to trade with other business and customers from around the world. In doing so, they do one of two things: either they sell goods and service aboard for which they will receive payment ( exports), or they buy goods and service from abroad, in which case they will have to pay for those goods and service (imports). Exchange rates might affect Tesco and water aid in the following ways: • Exchange rates changes can increase or lower the price of a product sold abroad • The price of imported raw materials may change • The price of
