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PESTN analysis is used to analyze in analyzing
the current state/position in the organization in
relation to its external environment. As the
beginning of the strategic management process an
organization needs to analyze the environment and
identify its strengths, weaknesses, opportunities and
threats. In identifying opportunities and threats the
PESTN analysis can be used as it gives a detailed
analysis of the external/macro environment in which
it operates. It stands for:-

Political factors
Economical factors
Socio-cultural factors
Technological factors
Natural factors

 Political Factors :-
Political factors are basically to what degree
the government intervenes in the economy. Specifically, political
factors include areas such as tax policy, labor law, environmental
law, trade restrictions, tariffs, and political stability. Political factors
may also include goods and services which the government wants
to provide or be provided (merit goods) and those that the
government does not want to be provided (demerit goods or merit
bads). Furthermore, governments have great influence on
the health, education, and infrastructure of a nation.

 Economical Factor :-
Economic factors include economic
growth, interest rates, exchange rates and the inflation
rate. These factors have major impacts on how businesses
operate and make decisions. For example, interest rates
affect a firm's cost of capital and therefore to what extent
a business grows and expands. Exchange rates affect the
costs of exporting goods and the supply and price of
imported goods in an economy.

 Socio-cultural Factor :-
Social factors include the cultural aspects and include
health consciousness, population growth rate, age
distribution, career attitudes and emphasis on safety. Trends
in social factors affect the demand for a company's products
and how that company operates. For example, an aging
population may imply a smaller and less-willing workforce
(thus increasing the cost of labor). Furthermore, companies
may change various management strategies to adapt to
these social trends (such as recruiting older workers).

 Technological Factor :-
The changes in the technology used in the industry
Infrastructure such as electricity, telephones and broadband
internet Level of research and development in the industry
Level of automation.
 Competing technology development
 Research funding
 Associated/dependent technologies
 Replacement technology/solutions
 Manufacturing maturity and capacity
 Information and communications

 Natural Factor :-
The natural resources owned by the country such as oil,
water, trees and so on. Climate situations (seasons and
weather patterns)Natural disasters such as floods and
volcanoes.

PESTN Analysis
The PESTN Analysis identifies changes in the market caused by:
Political , Economical, Social and Technological factors & natural
factors.
Political Analysis and Factors: Those Non- Alcoholic drinks like;
Coca-Cola, are within the food category, under the FDA (Food and
Drug Administration). The government has control over the
manufacturing procedure of these products in terms of regulations.
Companies who fail to meet the standards of law, are fined by the
government. Following are provided some of the factors that are
influencing Coca-Cola's Operations.

1.Changes in Laws and Regulations like; changes in
Accounting Standards, taxation requirements (tax rate
changes, modified tax law interpretations, entrance of new
tax laws), and environmental laws either in domestic or
foreign authorities.
2.Changes in Non-Alcoholic business era. These are;
competitive product and pricing policy pressures, ability to
maintain or earn share of sales in worldwide market
compared to rivals.
3. Political Conditions, specifically in international markets,
like; civil conflict, governmental changes and restrictions
concerning the ability to relocate capital across borders.

Economic:
In 2001, the recession influenced the companies
operations, but because of aggressive actions the US Economy
estimated to have returned in positive growth in 2002. Currently,
because of global recession, Coca-Cola can borrow capital and
invest in other products, because the interest rates are lowered.
Also, it can borrow to advance its research of new products and
technology. By researching for new products is cost effective, the
company could sell its products at a lower price, so its customers
would purchase more Coca-Cola products at a lower price.

Social:
The majority of US citizens are exercising healthier lifestyles.
That has strongly influenced the sales of non-alcoholic beverage
sector, because many customers are switching to bottled water and
diet colas like; Coca-Cola Light or Zero, instead of drinking beer or
other beverages. Additionally, time management is quite 43 % of all
households, and it has increased. Customers aged from 37 to 55, are
concerned with their nutrition. Also, large portion of the population is
within the range of baby boomers age. While many customers are
getting at older ages in life, they are more concerned in long term
increasing their permanence. That will continue to affect the non-alcoholic
beverage sector, by increasing the demand, in healthier and
other beverages.

Technological:
Some factors that affect the company's actual results to vary
essentially from the expected results, are the following:
1.The efficiency of company's advertising, marketing and promotional
programs, The new technology advances of television and internet that
use incomparable effects for advertising through the use of media.
Those advances make the products seem attractive. This supports the
selling promotion of the products. Coca-Cola in media tends to use this
technology so, to sell effectively its products.
2. Entrance of cans and plastic bottles in the past, have increased sales
volume for the company because they are easier to carry and
customers can bin them once they have been used.

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PESTN ANALYSIS

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