BUSINESS AND MANAGEMENT --- PAPER 1 CASE STUDY PACK

PEST ANALYSIS
CASE STUDY: UNITED WORLD PEACE MISSION TO LOYKA
For use in May and November 2013
PEST Analysis for Royal Danish Bearings (RDB)
PEST analysis provides a framework for decision makers to consider factors in the external business
environment that affect business operations. These factors can be categorised into four sections: political,
economic, social and technological factors which can present opportunities and threats as outlined in the
case study.
Political

International quality standards to enhance the ease of exporting to different regional trading blocs
(lines 29-30)
Legislation and government incentives to support environmentally-friendly products, such as ball
bearings produced using green technologies (lines 117-118)
Public-private partnerships with the Swedish and German governments (line 131)
Dealings with the local urban planning authorities (line 139)

Economic

Huge growth of the automotive sector in Brazil, China and India (ball bearings are widely used in the
auto industry)
Positive outlook for the ball bearings industry, with growth expected over the next few decades
(lines 6-7)
Ongoing uncertainties in Europe, such as the debt crisis of Portugal, Italy, Greece and Spain
High unemployment in Europe --- both Greece and Spain have record unemployment rates of over
26% (Greece 26.8% and Spain 26.6%, as at January 2013)
Germany has its own economic problems, with Angela Merkel (the German Chancellor) announcing
that 2013 will be an even more difficult year for Europes largest economy especially as the
Eurozone debt crisis is far from being over
Financial crisis (line 61) still affecting many parts of the world, including Europe
Brazils high interest rates makes it an attractive location for foreign investment, but this has led to
an appreciating currency which hurts the competitiveness of manufacturing in Brazil
Demand for ball bearings slowing down in Europe (lines 76-77)
Economic prosperity and industrialisation in Brazil, China and India (lines 77-78); The Economist
predicts that China will overtake the USA as the largest economy in the world by 2018
Offshoring opportunities in the 12 smaller factories in Brazil, China, India and other locations (lines
98-99)
Generous redundancy packages in Europe; costly if RDB closes its megafactories in Germany and
Sweden and/or downsizes in Denmark
Lower labour costs in Brazil, China, India and other parts of the world
Publically listing RDB on the Frankfurt Stock Exchange (lines 122-123)
Concerns whether small factories in industrial parks on the outskirts of Mumbai or So Paulo could
achieve the same outcomes as the European megafactories, such as economies of scale (lines 141142)
Reconfiguring the European megafactories to autonomous cells to serve customers in different
regions of the world, using local salespeople around the world (lines 150-153)
Formation of strategic alliances with ball bearings makers in Brazil, India and China (line 155)

Author: Paul Hoang

Tutor2u 2013 www.tutor2u.net

BUSINESS AND MANAGEMENT --- PAPER 1 CASE STUDY PACK

PEST ANALYSIS
CASE STUDY: UNITED WORLD PEACE MISSION TO LOYKA
For use in May and November 2013

Opportunities to bring in external stakeholder, i.e. a major investor (line 158)

European labour costs in the long term would be too expensive (lines 168-169)

Social

Environmental campaigners putting on pressure due to the high pollution levels in the surrounding
area of RDBs megafactories (lines 41-42)
Work patterns and practices at RDB follow the northern European Christian calendar and local
traditions (lines 51-52)
Demographic changes in Europe (lines 166-167)
Green approaches to manufacturing (line 74)
Workforce that better resembles RDBs customers, increasingly from Asia, India and South America
(lines 86-87)
Social audit of RDBs impact on the environment and on its customers carbon footprint (lines 90-91)
International cultural issues of relocating to 12 small factories in China, India, Brazil and other
countries (lines 98-99, 101)
Uncertainty about customers perception of a rebranding of RDB (lines 147-149) and public opinion
about Green Bearings being green in name only
Developing a global workforce (line 166)

Technological

Most global industrial output continues to be mechanical devices (such as gearboxes, wheel
suspension, fighter jets and space shuttles), thus creating growth opportunities for the ball bearings
industry (lines 8-10)
Just-in-time production to respond faster to the needs of customers (lines 26-27)
Total quality management, Kaizen and benchmarking in the ball bearings industry (lines 36-37)
Flexibility in production methods of manufacturing ball bearings, such as flow, batch and job (lines
63-65)
Green approaches to manufacturing (line 74)
Manufacturing of ball bearings in smaller and more flexible factories (lines 79-80)
Logistics would be improved by locating smaller factories nearer to customers, thus benefiting from
better response time, distribution and delivery (lines 81-82)
Opportunities to focus on green technologies (line 88)
Information Communication Technology to communicate more effectively to a wider range of
external stakeholders (lines 112-113).

Author: Paul Hoang

Tutor2u 2013 www.tutor2u.net