![]() ![]() Weaker currencies can seriously affect Netflix’s profit rates. Economic factorsĪmong other things, Neflix is highly susceptible to fluctuating exchange rates. That way, users from countries where there is no access to the entire database can still access all the content. That’s using a Virtual Private Network to extend an existing connection. Still, people are getting access, either illegally. Thus, all of the platform’s content is not legally available to everyone. In fact, China is demanding that Netflix heavily censor their content. The fault lies with the Chinese government. government is not the reason Netflix is not operating China, one of the largest economies in the world. Any American company, including Netflix, is prohibited from doing business there. That is the result of decisions made by the U.S. North Korea, Syria and Crimea are examples. Therefore, it also cannot offer content from all countries. Netflix is not available in all countries. The first political factors Netflix faces are censorship and permissions. Because it operates internationally, it faces many factors and influences, including those from the PEST analysis. The service operates in more than 130 countries. ![]() Users then get unlimited access to all movies and series on the platform. Netflix is a media company that offers original and licensed content for a flat monthly fee. You will find Political, Economic, Social and Technological factors affecting the macro environment of the business of Netflix. Example of PEST Analysis for NetflixĬonsider the following example of the PEST Analysis for Netflix. The factors of the PEST Analysis, political, economic, social and technological factors, will vary in importance to a company based on its industry and the products and services it supplies.įor example, consumers and B2B companies tend to be more affected by the social factors, whereas an organization with a specific service provision to the Government would be more affected by political factors.įactors that are more likely to change in the future or more relevant to an organization will carry greater importance.įor example, an organization that has to borrow external capital will find that the economic factors (especially interest rates) are becoming more important than the political or social factors. In addition, technological factors affect the costs and the quality of products and services and often lead to innovation. Technological factors influence entry barriers, minimum efficient production levels and in-sourcing and outsourcing considerations. The rate of technological advancement is an important factor to monitor, especially in the long term, for many organizations. Technological factors include ecological and environmental aspects as well as aspects of research and development (R&D) and automation. Based on social factors, organizations may change their management strategies to adapt to these developments for example by recruiting older staff on account of a shortage of knowledge workers. These social factors influence the demand for the products and services of an organization and how this organization responds to this demand.Īn ageing population, for example, may imply a smaller and less flexible staff resulting in higher labour costs. Social factors are, among other things, cultural aspects and include health consciousness, population growth, age structure, careers and an emphasis on safety. Exchange rates may affect the costs of export goods and the supply and prices of imported goods. These factors have a major impact on how businesses operate and make decisions.įor example, interest rates may influence an enterprise’s cost of capital and therefore they may influence to what extent a company grows and expands. Economic factorsĮconomic factors include growth, interest rates, disposal income rates, and the inflation rate of an economy. Government regulation also has great influence on the healthcare, education and infrastructure of a country or nation. Political factors may also include goods and services the Government wants to provide or does not want to provide or be provided (for instance subsidies). Political factors include areas such as fiscal policy, employment laws, environmental law, trade restrictions, rates and political stability. These factors are of crucial importance for strategic management. Political factors indicate to what extent the Government influences in the economy. ![]() Figure 1 – 4 Factors of PEST Analysis Political factors of the PEST Analysis ![]()
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