PEST is an acronym that stands for Political, Economic, Social, and Technological forces that must be considered by businesses. These forces can impact consumer needs and behavior in ways that increase or decrease business profits. The document provides examples of how changes in gas taxes or economic conditions could impact certain businesses. It also discusses how a UAE business selling fried chicken and soda might be affected by a social trend toward healthier lifestyles and how a perfume seller could respond to economic threats. Businesses must monitor the external PEST environment to understand emerging opportunities and threats in order to adapt their products, services, and strategies accordingly.

1. PEST Political, Economic, Social and Technological Forces and Businesses

2. What is PEST PEST is an acronym for Political, Economic, Social and Technological forces. Define these words: Political: _____________________________ Economic: ____________________________ Social: _______________________________ Techological: __________________________

3. Examples of PEST Forces Give an example: Political force:____________________________ Economic force:__________________________ Social force:_____________________________ Techological force:________________________

4. PEST & Businesses Businesses are aware of PEST forces because they can increase or decrease profits: PEST forces can change consumer needs. Example 1: The government increases taxes on gas to double its price. What businesses could suffer (profits decrease)? Gain (profits increase?) Example 2: The economy decreases and a people in a country become poorer. What businesses could suffer? Gain?

5. Possible Answers to Examples Example 1: The government increases taxes on gas to double its price. What businesses could suffer (profits decrease)? Gain (profits increase?) Car dealers selling SUVs could suffer. Car dealers selling fuel efficient cars could gain. Example 2: The economy decreases and a people in a country become poorer. What businesses could suffer? Gain? Retail stores selling luxury goods (example, Rolexes) could suffer. Retail stores offering low prices/discounts could gain.

6. PEST Forces and Businesses Give 1 example of a current P,E,S, and T force in the U.A.E. that could change consumer needs in it. (The example must be different than the ones on the previous slide) Explain what type of businesses (and products) would be interested in this change. Political. Give example. Explain how it can change consumer needs in the U.A.E. Explain what type of businesses would be interested in this change. Economic. Social Technological

7. PEST Question ABC Business in Fujairah sells fried chicken and soda drinks. What social force may change consumer needs to reduce ABC’s profits? What can ABC do to respond to this threat? ______________________________________________________________________________________________________________________________________________________

8. PEST Question ABC Business in Fujairah sells fried chicken and soda drinks. What social force may change consumer needs to reduce ABC’s profits? What can ABC do to respond to this threat? A social force may be people wanting a healthier lifestyle and eat healthy food. ABC can respond to this threat by selling steamed chicken and fruit juices.

9. PEST Question XYZ Business in Dubai sells expensive Christian Dior perfume. What economic force may change consumer needs to reduce ABC’s profits? What can ABC do to respond to this threat? ______________________________________________________________________________________________________________________________________________________

10. PEST Question XYZ Business in Dubai sells expensive Christian Dior perfume. What economic force may change consumer needs to reduce ABC’s profits? What can ABC do to respond to this threat? The economy could significantly decline with people having less money to buy luxury goods such as expensive perfume. XYZ could respond to this threat buy selling a cheaper brand.

11. Review Questions Why should businesses be aware of PEST forces in their country? What are common PEST forces that a business should be aware of? How can businesses respond to PEST forces that give opportunities (may increase profits) or present threats (may decrease profits)?