PESTTG Analysis

PESTTG Analysis

The tool we use for understanding the macro-environment (big picture) in which we operate.

The Big Picture

PEST

PoliticalEconomicSocialTechnicalMegatrendsGlobalisation

Political

Critical Success Factor

Your main Critical Success Factor is your ability to:

COMPLY WITH THE RULES

Political

ecological/environmental issues – kyoto protocol current legislation host market future legislation international legislation regulatory bodies and processes government policies ADS (Approved Destination Status) government term and change trading policies (FTA’s) funding, grants and initiatives home market lobbying/pressure groups international pressure groups wars and conflict

http://www.eturbonews.com/8828/tourism-and-politics-collide-thailand-and-fiji

Rules of the game

You must understand government policy relating to your industry

Most policy is discussed for months and sometimes years in advance

You going to monitor these potential changes that could seriously affect the viability of your business

Economic Environment

Economic

home economy situation overseas economies general taxation issues taxation specific to product/services seasonality/weather issues market and trade cycles specific industry factors market routes and distribution trends customer/end-user drivers interest and exchange rates international trade/monetary issues

Burton’s Four phases of Tourism Participation

Phase Economic Developments Tourism Participation

ONE Mainly subsistence-based and pre-industrial.Rural, Agrarian.Large Gap between poor masses and small elite.

No mass participation in tourism.Elite travel to domestic and international destinations.

TWO IndustrialisingRapid Growth of urban areas.Growing middle class

Widespread participation in domestic tourism .Increased scope of international tourism by elite.

THREE Almost industrialised.Population mostly urban.Middle class becoming dominant.

Mass participation in domestic tourism, and increase in short haul international tourism.Elite turn towards long hall international tourism.

FOUR Fully industrialised ‘high tech’ orientationMostly urban.High levels of affluence throughout the population.

Mass participation in domestic and international (long haul and short haul) tourism

Economic Environment

The most common approach to the study of economics of tourism is to divide it into two major areas:

Supply (destination resources) Demand (people or market)

Supply

Movements away from the market equilibrium cause inefficiencies

Undersupply of product, leads to high prices and profit loading, with not everyone being able to buy what they wish, frustration

Oversupply of product leads to low prices and questionable sustainability, empty rooms, unused capacity, inefficiency of investment

Demand

Demand = Motivators x Facilitors Resistance Factors

Economic Factors affecting demand Disposable Income

Inflation Interest rates (including Official Cash rates) Employment Foreign Exchange Rates

Non-economic Factors Health Time

Socio-Cultural

Socio-Cultural Impacts

People and their attitudes are the focus of socio-cultural impacts.

Social lifestyle trends demographics consumer attitudes and opinions media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors advertising and publicity ethical issues trinketisation overcrowding corruption

Technology

Technology

Technology

Scan and evaluate horizon looking for changes in technology that will enhance business

More to technology than just computer technology

Think faster, lighter, stronger, Think of how you can make your customers

ability to book easier! If you aren’t innovating I bet your competitors

are!

Technological competing technology development research funding associated/dependent technologies replacement technology/solutions maturity of technology manufacturing maturity and capacity information and communications consumer buying mechanisms/technology technology legislation innovation potential technology access, licensing, patents intellectual property issues global communications research and development

MegaTrends

Advancements in Communications

Internet Smartphones Tablets Laptops Wi-fi Accessibility Viral marketing Blogs Forums Youtube

Eco Tourism

ENVIRONMENTAL PROTECTION Protect natural assets Conserve resources Maintain cultural assets Protect lifestyle Monitor Impacts Set limits to change

Aging Population

Over 50% of the discretionary spending power

boomers accounting for about 80% of all leisure travel

10,000 Baby Boomers will reach the age of 65 every day for the next 18 years

http://www.youtube.com/watch?v=bu4v1F2LwpM

Globalisation

Globalisation

International Competition Legislative requirements across Borders Passport and Visa obligations Diversity of staff Cultural misunderstanding Company structure

Using PEST to develop strategy

Change type (PESTTG) Nature of change Impact implication Market driver Key success factors for winners Strategy response

Using PEST to develop strategy