Question Tag: Organizational operations

Influence of PEST factors on organisations’ operations

i) Political factors: The decisions made by the government can affect the operations of the organisation. Government’s rules and regulations on health and safety for example are mostly restrictive and are aimed at protecting the employee. They tend to reduce the organisation’s profits which will affect the rewards and performance of the organisation as well as on the organisation’s ability to operate competitively and expand.

ii) Economic factors: The various economic indicators can influence how the organisation operates. The underlying rate of economic growth and the phase of the economic cycle (recession, depression recovery and boom) can positively or negatively affect the operations of the organisation. The fluctuations in the national economy can have profound effects on business activities and on the fortunes of the firm and its operations.

iii) Socio-cultural factors: The values, norms and expectations of particular regions or group of people will influence the operations, policies and practices of an organisation. Changing attitudes and values have influenced the way men perceive women in managerial positions and the accompanying demographic, religious, educational and ethnic conditioning.

iv) Technological factors: Technological innovations may be a way to improve the firm’s productivity and increase its competiveness. On the other hand if the organisation fails to adopt new technologies, it can negatively affect its operations. Organisations must therefore stay current with technologies such as CAM and CAD as they evolve and must also be prepared to act quickly to embrace important new disruptive technologies shortly after they have been introduced to facilitate efficient and effective operations.