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. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. However, changes in the external environment also create new opportunities and the letters sometimes are rearranged to construct the more optimistic term of STEP analysis. Many macro-environmental factors are country-specific and a PEST analysis will need to be performed for all countries of interest. The following are examples of some of the factors that might be considered in a PEST analysis.

Political Analysis
y y y y y y

Political stability Risk of military invasion Legal framework for contract enforcement Intellectual property protection Trade regulations & tariffs Favored trading partners

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PEST ANALYSIS
y y y y y y y y

Anti-trust laws Pricing regulations Taxation - tax rates and incentives Wage legislation - minimum wage and overtime Work week Mandatory employee benefits Industrial safety regulations Product labeling requirements

Economic Analysis
y y y y y y y y y y y y y y

Type of economic system in countries of operation Government intervention in the free market Comparative advantages of host country Exchange rates & stability of host country currency Efficiency of financial markets Infrastructure quality Skill level of workforce Labor costs Business cycle stage (e.g. prosperity, recession, recovery) Economic growth rate Discretionary income Unemployment rate Inflation rate Interest rates

Social Analysis
y y y y y y y

Demographics Class structure Education Culture (gender roles, etc.) Entrepreneurial spirit Attitudes (health, environmental consciousness, etc.) Leisure interests

Technological Analysis
y y y y y

Recent technological developments Technology's impact on product offering Impact on cost structure Impact on value chain structure Rate of technological diffusion

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PEST ANALYSIS The number of macro-environmental factors is virtually unlimited. In practice, the firm must prioritize and monitor those factors that influence its industry. Even so, it may be difficult to forecast future trends with an acceptable level of accuracy. In this regard, the firm may turn to scenario planning techniques to deal with high levels of uncertainty in important macroenvironmental variables. Now we will briefly tell about these factors;

Political
The political situation of Pakistan is not satisfactory. Due to the rapid change in the Government every government sets its own new trade policies. Govt should apply sustainable policies for the beneficial of the exporters as well as the investors. Talking about fast stitching industry is provided an environment for women that they can have a reasonable environment for working, and they can gain healthy profit. They can feel secure by working here. Pakistan government gets money by collecting taxes, having their labor employed so they can have wages of their work hours. y y y y y y y y y y Elections are conducted in Pakistan on periodic basis so we can say this shows the economic stability of our country which is very much helpful for our industry Employment laws in Pakistan are not so much strict, wages, and some other things have a soft edge for us so it is also favorable for industry consumer protection laws are there in our country but not seriously implemented so it is very helpful for garments industry in country environmental regulations are also not so strict in our country so factory owners dont have to pay a lot for this purpose industry-specific regulations are very much favorable for this industry competitive regulations does not exists in our country so we can easily do anything over here inter-country relationships/attitudes are very good with other Islamic countries which is very helpful for the exports of these goods Pakistans areas like Faisalabad, Karachi, Lahore etc are very much safe and also very business friendly Terrorism is there in our country which has a negative impact on overall business political trends are in a very positive way i.e. our political leadership is very much serious about flourishing the industry so this factor also very much helpful in progress of the industry

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PEST ANALYSIS y y y governmental leadership has a very positive attitude about this specialized industry so due to this our industry is flourishing tax structure is very much reliable and very much business friendly Government structures are very much flexible and now also the making of a specialized ministry for this industry is under consideration.

Downsides Following are downsides of the political factors due to which businesses goes in a reverse direction; y y y y y y y Corruption Bad law and order situation Terrorism Lack of interest of government in businesses High tax rates Energy crises High rate of crimes

Economic
The economic condition of Pakistan can also affect the foreign investors increasing inflation rate make the cost of production high and thus reduce the profit margin of the investor. Pakistan saw the greatest booms in this industry. Even more common was women stitching clothes at home. So we can say; y y y Economic growth trends in Pakistan is very much negative which has created alarming situation for all the industries including the garments industries Taxation structure in Pakistan is not so flexible and also tax rates are increasing day by day so this is also not a very good situation for progress of the industry Government spending level on peoples Is not up to the mark so due to this peoples standard of living is not improving due to that the sales of all the industries are decreasing including our garments industries Disposable income of some classes of Pakistan is very high which will spend it on getting new and fine ready to wear clothes etc so in this context it is really helpful for flourishment of this particular in industry Job growth rate is very low so this is also a negative indicator Unemployment rate is very high so this also leads to low sales of the goods and in total leads towards failure of the business

y y

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PEST ANALYSIS y y y y y y Exchange rates are very low as we compare our rupee with other foreign currencies so due to this business do not prosper in Pakistan Inflation rate in Pakistan is very high so this is also not a good indicator for this industry Tariff rates are very high for industries in our Pakistan which is very disappointing for industries Import of Pakistan are very high for luxurious and ready to wear clothes as people like to put on the imported brands this is not good for the industry Exports are also at high rate so this is very good indicator for the industry Production level of the country for garments are very high which has made us a country with highest cloth and ready to wear garments even the denim stuff of levis and diesel is also made in Pakistan Availability of materials is very easy because Pakistan is the most fertile land and very much famous for its cotton production which is best and is also of very fine quality

Also fiscal and monitory policies of Pakistan are not so stable and our economic policies are not so much stable so it is also not business friendly so it does not help industries to grow.

Social
Demographics Pakistan is a country with highest no of young people ( our target customers) and growing population of all the age groups and both of the genders. If we consider this then we will come to know that our customers are increasing day by day so if we consider this then it is a very good indicator for our garnet industry. Social factors that affect the economic environment of a business are the cultural influences of the time. For example, a fashion designer that creates bell bottom, striped pants will not succeed in an environment where straight-leg, solid colored pants are desired. A social environment that tends to be more conservative will not support styles that appear to be trendy. The fashion designer's business will suffer if he does not change the clothing style. The same would apply to the manufacturers that produce and stores that sell these wares. We can say; y Demographically we have much more opportunities in Pakistan than to have in other areas of the world.

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PEST ANALYSIS y y y y y y y y y Our youth is now more conscious about their dressing so the trend of ready to wears are incensing day by day Due to demonstration effect and mass advertising of many brands people are more conscious about this so this is also very good for the industry Now people are more educated and hence they have more understanding and more knowledge about their dressing so the trend of read to wear garments us increasing More brads identification so more choices and more urge for good clothes Immigration rate is high due to Afghanistan war in our Pakistan so this is also a favorable condition for this industry Health and wealth are very important and these are with every one in Pakistan so people used to put on good ready made garments Fashion are there in market because due to globalization now people have to be aware of all the latest fashions so this increases the sale of the garments Occupations are good in Pakistan so people spend a lot on clothing and due to this our business is flourishing Living standards are now more developed and good so people try to put on good quality garments in order to maintain their status

Technological
Innovation and technology affect business environments. As technology advances, a business is forced to keep pace. For example, when computers were first invented, they were the size of a room. Users were forced to employ punch cards to perform basic functions. Today, computers that are much more powerful can fit into the palm of a hand. Businesses that do not keep up with technology risk increased costs of production and higher prices. If the company's cost to produce a product or service outpaces competitors, the company may soon find itself out of business. Technology is now a days backbone of all the businesses in the globe so if we say; y y y y Media marketing will be up to date and will be revised periodically Pakistan is developing country so here if we use modern technology we can compete our competitors Now a days people are very conscious about quality so for quality new technologies should be opted Now in Pakistan they should choose the platform or website where you wish to position your brand and its target audience due to change in living styles and interaction of people with internet etc New designs and new techniques for better an d stylish stitching etc

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PEST ANALYSIS Because technology is advancing at such a rapid pace, a demand for those understanding which new technologies have the greatest importance is growing. Because of this, some trend spotting companies dedicated to the more technological end of trend spotting have entered onto the market. Technological advancement includes the public preferences in terms of machines and equipment whether its a small one or a big one, latest designed equipments, having all the technological aspects which are basic needs of the particular unit UPS or generator facility, motor machines that can work quickly.

Conclusion
From all the above discussion we can say that Pakistan is a favorable place if we see social and technological environment of our country and for more industries in this sector we should work on both politically and economic environment so that our business environment would become more and more friendly.

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