PEST Analysis Of Entrepreneurship: Political And Technological Factors (Essay Sample)

Student’s Name Course Professor’s Name Date PEST Analysis of Entrepreneurship Big names like Bill Gates, Oprah Winfrey, Steve Jobs, and Andrew Carnegie epitomize the heights of success entrepreneurship can attract. The potential for earning, freedom and the ensuing sense of achievement have convinced many people that it is worthwhile to become an entrepreneur. This paper presents a PEST analysis of entrepreneurship. A business is subject to political, economic, social, and technological factors, all of which are beyond the influence of the business, a situation that is exacerbated by the size of small and medium-sized enterprises (SMEs). Entrepreneurial success is achievable by being conscious and agile to the changes in political, economic, social, and technological environments. Political Environment Political factors encompass political institutions and processes, legal issues, governments and public attitudes towards the industry. Changes in the political climate of a country or region in which an entrepreneur operates attract risks as well as opportunities. Unfortunately, the sheer size of a typical entrepreneurial venture increases its susceptibility to the mildest change in the environment; such startups are often small and lacking a robust network of resources compared to larger businesses against which they compete nonetheless. An entrepreneur, too, must focus on complying with the regulatory requirements, such as tax regulations, cope with barriers to entry into the industry, and still spare some resources for product development, staffing, branding, and marketing (Frue par. 6). This simultaneous pursuit of different goals with limiting capital not only reduces the ability to absorb the adverse effects of each political variable, but also attracts high operating costs. Therefore, it is imperative that entrepreneurs focus on and keep track of political agendas that are meant to promote the success of SMEs. Economic The overall state of a country or region’s economy defines its economic environment. A country’s fiscal policies, interest, inflation, and stock exchange rates are some of the variables subsumed under economic factors. The economic landscape can make or break a business, partly because it influences business ideas and the population’s purchasing power necessary for sustaining the SME throughout its different growth phases. Frue explains that startups truly give back to the society, by providing employment opportunities for instance, but they need genuine support from the latter to get to this point; established companies should encourage entrepreneurs by investing in their products and helping them gain a market base (par. 8). This support notwithstanding, an entrepreneur must still consider the present economic environment and how it impacts the purchasing power of its target market in addition to how changes will impact on the business in the foreseeable future. Social Every society has a set of customs, lifestyles, and values, all of which are shaped by, among other complex factors, age, gender, ethical beliefs, language, religion, and education. In defining a social class, a question that a businessperson will ultimately face, income, occupation, class norms, and lifestyle are the paramount elements to consider (Rakesh 21). The characteristics of the social classes the entrepreneur targets inevitably affect the ability to mobilize resources, market the product(s), and the general functioning of the firm. Accordingly, Frue advises that entrepreneurs should develop a nuanced understanding of their customer – define the problem the consumer faces and assess the political policies and present economic state – and use the knowledge to innovate a befitting product (par 11). Since business is not just about solving today’s problems under the prevailing circumstances but adapting to the future as well, entrepreneurs can benefit from recognizing who their customer is and how trends, population, and buying behavior change; and there are tools for gathering and analyzing data to glean reliable market insights for effective decision making. Technology The interdependence and interrelationship between technology and business is undeniable. Advancements in tech...