- 10 Marks
Question
favourable or unfavourable to its present survival and future success. The influences (current influences and possible future influences) of the business environment of HPC need to be analysed to ensure that none are over-looked.
Required:
a) Using PESTEL analysis, discuss HPC’s external business environment that appears to be either favourable or unfavourable to its present survival and future success. (8 marks)
b) Discuss TWO (2) limitations of PESTEL as a technique in analysing the environmental influences of HPC. (2 marks)
Answer
a) PESTEL Analysis of HPC’s External Business Environment:
- Political Environment: Ghana enjoys relative peace, which supports a stable business environment for HPC’s operations despite recent challenges from COVID-19.
- Economic Environment: The Ghanaian economy’s slow recovery from COVID-19 has affected consumer demand and inflation, influencing HPC’s cost structure and future profitability.
- Social Environment: Increased awareness of healthy eating, growth in hotels, and fruit consumption trends positively influence HPC’s market.
- Technological Environment: HPC is less technologically advanced than multinational competitors, impacting efficiency and scalability.
- Environmental Influences: The use of non-environmentally friendly packaging materials poses risks for sustainability.
- Legal Environment: New tariff policies favouring imported goods may disadvantage HPC, making it harder to compete.
b) Limitations of PESTEL Analysis:
- PESTEL is useful for identifying past and present influences but less effective in predicting future trends.
- It provides a qualitative framework but lacks quantifiable assessments, requiring subjective judgment for importance ranking.
- Tags: Business Environment, External factors, PESTEL Analysis, Strategy Analysis
- Level: Level 3
- Topic: Environment analysis
- Series: APR 2022
- Uploader: Dotse