Pest for Next Plc

In: Business and Management

Submitted By babyvivi0613
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The External environment consists of opportunities and threats that are outside the organisation and are two types: macro environment and micro environment.

PEST analysis

This analysis is a helpful tool to take a closer look at the general environment. Although the PEST analysis rely on past events and experience, it can be used as a forecast of the future (Wilson and Gilligan, 1998).

Political factors:
The political environment is good. The government is stable and reliable, even if Britain fails to achieve total agreement with some EU policies from time to time. At the present no EU directives are known which will have a direct effect on the UK clothing retail industry in the near future. Due to the EU membership a trend can be seen towards stricter environmental protection legislation. This may have a direct or indirect effect on NEXT or his suppliers.

Economic factors:
The current economic climate in the UK is unstable and this brings short term volatility in NEXT sales which, in turn, make forecasting difficult. In addition, the weakness of Sterling against the US Dollar and the Euro, the main purchasing currencies, has brought further challenges to their buying teams. (Next financial statement, 2009)
Looking at the economic environment, it is somewhat tricky since on the one hand there is the strong sterling compared to the Euro. Euroland encourages imports and try to hold domestic prices at an attractive level. But on the other hand it is difficult for the UK to be competitive outside its boundaries because of the high pound sterling exchange rate against the Euro. As NEXT sells about 96% in the UK marketplace, this may currently only have a limited effect, but could be more important in the future when thinking globally.
This can also be seen on the "Big Mac - Cross Rates" table, where hamburgers sold in the UK are more expensive than in…...

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