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PEST Analysis of General Electric Company
As a multinational company, General Electric has to deal with political systems of different nations. In spite of some of the countries presenting favorable environment for business survival and growth, others present difficult conditions. Tax systems and regulations also differ across countries and so does the level of government intervention in business activity. For example, in United States, the Internal Revenue Authority requires companies to submit tax returns annually on April 15 (Dibb & Lyndon, 2004). Government intervention is minimal and the business environment is much favorable. Political stability can also be said to be reasonable so that business survival is highly probable. These conditions may not apply in other countries such as China and Singapore where government control over businesses is high.
Fluctuations in interest rates, exchange rates and money value greatly affect activities and operations of General Electric. Factors such as deflation and inflation as well as government spending in different countries in which General Electric has ventured often influence business productivity and profitability. The economic impacts caused by the current economic crisis are being felt all over the world. General Electric has recorded decreased sales mostly due to lower lending rates by banks. In addition to that, prices of inputs have also risen considerably.
Norms, culture, religion and social set-ups often determine how a business should conduct itself in a particular country or environment. In the different countries which General Electric has ventured into, the company is faced by different social-cultural challenges which influence its corporate culture to a very large extent. The culture in a particular country determines the working hours, employment policies, procedures for appointing managers and the type of goods to be produced. Similar to other multinational companies, General Electric has to contend with such issues and deal with them effectively.
Technology in the modern world is advancing at an enormous pace. Innovative products are always being introduced using more advanced technology each day. Older technology is therefore getting outdated at a very high rate across all sectors in the economy. Aimed at outdoing competitors, many companies have turned to innovation, research and development which have brought about improved levels of technology. The rate of technology advancement globally varies with each country that General Electric has invested in as they vary in terms of resources available. Among the countries with the highest rate of technology advancement are United States and Japan which General Electric has ventured into (General Electric, 2009).
As a result of multinational companies having to deal with different sets of political, economic, social-cultural and technological aspects, designing a PEST analysis exclusive to General Electric was almost impractical. It is however notable that there are some factors that are universal among countries. Technology constitutes one of these factors and a closer look at the PEST analysis reveals that technology is advancing at a very high pace globally. Multinational companies like General Electric must therefore be on the lookout to ensure that their technology is up-to-date when new forms are introduced in the market. Some economic factors such as global crises which lead to increase in interest rates and decrease in bank lending capacity are also universal. Conducting a PEST analysis aids a company in understanding the business environment better so as to facilitate the better planning and resource allocation to maintain high productivity and profitability.
Dibb, S. & Lyndon, S. (2004). Marketing briefs: A revision and study guide. Oxford: Butterworth-Heinemann.
General Electric, (2009). Our company. Retrieved July 6, 2009 from http://www.ge.com
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