PEST & STEEP Analysis

PEST & STEEP Analysis

Political
Political factors include:
Political Stability
Risk of War
Laws
Taxes
Working Conditions
Trade Regulations
Intellectual Property
Protection
PEST & STEEP Analysis
Economic
Economic factors include:

Type of economic system
Infrastructure
Labour Costs
Exchange Rates
Skill Level of Work
Force
Business Cycle Stage
Unemployment Rate
Inflation Rate
Interest Rates
PEST & STEEP Analysis
Social
Social factors include:

Demographics
Class Structure
Education
Culture (gender roles)
Entrepreneurial Spirit
Attitudes (health,
environment etc.)
Leisure Interests
PEST & STEEP Analysis
Technology
Technology factors
include:

Developments in
technology
Impact on cost
Impact on value chain
Technological
infrastructure
PEST & STEEP Analysis
PEST Analysis STEEP Analysis
Political
Economical
Social
Technology
Social
Technology
Economical
Ecological
Political
The only difference is Ecological
PEST & STEEP Analysis
Introduction

Marketing tool has been in used by businesses as a means to acquire their
competitive advantage in the industry. They use it mostly as a means to
measure their capabilities and compare it to the demands given by the business
environment they operate on. One such tool is the PEST Analysis. This study
will look into the description and implementation of the said tool. Moreover,
the paper will also be using it to present the external environment affecting the
operations of Starbucks HK.

PEST Analysis of Starbucks in Hong Kong
PEST & STEEP Analysis
A. Political Factors

The Hong Kong Special Administrative Region (HKSAR) has been under the rule of
mainland China for several years already after the handover of the British
Government. Nevertheless, it has been given a free hand in implementing business-
friendly laws in the land. ( 2004) These liberties allowed companies like Starbucks
Coffee Company International the capability to operate in the said country.
Moreover, the company has to similarly be compliant of any other rules and
regulation imposed by the HK government.

PEST & STEEP Analysis
B. Economic Factors

Hong Kong has been considered as one of the commercial
destinations in Asia. There has been a considerable flow of traffic
particularly involving tourists and other travelers in Hong Kong.
Travelers from the mainland have been very prevalent in the
recent years in Hong Kong. (2006) On the other hand, travelers
from the neighboring regions have also flocked the country with
the opening of the Disney theme park. (2002) This means that
the consumer base of Starbucks Hong Kong is considerably
affected by these changes in the economic standing in the
country, particularly the influx of consumers not only from the
mainland but also from the other spenders from the adjacent
Asian states.

PEST & STEEP Analysis
C. Socio-cultural Factors

The socio-cultural aspect of Hong Kong would be greatly discussed with the use
of and (1985, in and 1996) seminal work regarding cultural dimensions. Hong
Kong is categorized under far Eastern cluster. This means that the said state possess
a culture that has high power standard, low uncertainty avoidance, very collective,
and masculine. Hong Kong has been indicated to have a highly masculine society.
(2001) This shows that the major structures of the society in Hong Kong are
dominated by male. Needless to say that Hong Kong has a high level of gender
differentiation present in its society. (1999) indicated in their book that Hong Kong
is classified as a high power distance culture. This means that wealth and power are
indicators of success and influence in society. Recent studies show that Hong Kong
society has a rather collectivist culture. ( 2003)

PEST & STEEP Analysis
C. Socio-cultural Factors (continued)

Thus, this means that interpersonal relationship is regarded highly in this region.
The study of (1999) indicated that Hong Kong has a low uncertainty avoidance in its
culture. This shows that the consumers in the country tend not to plan their
purchases. Moreover, Hong Kong is said to have a strong long-term orientation.
(1999) This means that the consumers in Hong Kong tend to become loyal to a
brand once they have been satisfied with its product or services.
PEST & STEEP Analysis
D. Technological Factors

Majority of the consumers in Hong Kong are greatly capable of using computer-
based platforms. (2003) With a highly technologically savvy population, the
consumer base on the said country tends to look at the factor of convenience as an
advantage. Some studies indicate that a considerable number of Hong Kong
consumers shop online. (2004) In other words, Starbucks could take advantage of
this fact and start a platform that will essentially cater to this need of the consuming
public.

PEST & STEEP Analysis
Analysis

The discussions above have presented a rather favorable environment for foreign
companies like Starbucks in the HKSAR. The political and economic aspects as
indicated in the earlier discussions have revealed a set of environment that will
essentially encourage further investments in the country. Moreover, the
administrative region is also seen to have given companies enough leeway so as to
implement a strategy for financial growth. However, Starbucks should consider the
technological and cultural aspects of the administrative region closely in order to
acquire a greater market share of the beverage industry. Though they have already
established a recognizable brand, competitors are always lurking around trying to
dominate the market. Considering the social and cultural elements will keep the
loyal customers of Starbucks within their circle. On the other hand, exploiting the
opportunities advanced by the technological aspect of the region will similarly gain
the company additional customers. In doing so, the top of the beverage industry in
Hong Kong is for Starbucks taking.
PEST & STEEP Analysis
Conclusion

The paper has provided a concise definition of PEST Analysis. It shows the advantages of
making such environmental study for businesses. Moreover, it allows has presented the
environmental demands on which Starbucks Hong Kong has to contend with in order to
be on top form. It has shown the importance of knowing the factors that will eventually
influence the operations of the company. To illustrate, the economic factors have
established the potential of the market. The socio-cultural factors have presented the
demands on which the company should act in accordance with so as to maintain the
loyalty of its major customers. On the other hand, the technological factors represent the
opportunities in which the company could market their products and services. Similarly,
the political aspects has indicated the legal requirements that the conventions in which
the Starbucks have to take on. On the whole tending to these major findings in the
environment of Hong Kong, the company could easily provide for the necessary steps in
attaining its organizational goals.

PEST & STEEP Analysis