... the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political, Economic, Social, & Technological. A PEST analysis fits into an overall environmental scan as shown in the following diagram: "although the items in a PEST analysis rely on past events and experience, the analysis can be used as a forecast of the future. The past is history and corporate strategy is concerned with future action, but the best evidence about the future may derive from what happened in the past" (Lynch pp110). The Economic Forces: The overall state of the economy fluctuates in all the countries around the world. Economic changes alter customer behaviour such as buying power, ability to spend, willingness to spend etc. These factors affect the companies' ability to earn. During prosperity the economy is growing, the buying power is high, and the companies are doing well but during recession ...

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