Introduction
Game4U is an establishing business organization that wants to promote the welfare of children in the society. This company has come up with a business strategy of inventing various ways in which children could be prevented from taking on drugs. It provides games’ equipments and material to children as a way of keeping them busy during their free time. Games are very important to the lives of children and in particular the youths as it prevent them from becoming obese and at the same time promote socialization among the youth. In summary games provided by Game4U prevent children from involving themselves in negative behaviors.
PEST analysis of Game4U Company
PEST is an abbreviation of “Political, Economic, Social, and Technological”. Therefore PEST analysis addresses Political, Economic, Social, and Technological factors that affect a business organization. Below is a PEST analysis of Game4U Company.
Political factors
Just like any other business organization, the government intervene the daily business activities of Game4U Company. In order to start a Game4U Company an individual is required to get a business permit from the government through the local government. The main reason why an individual is required to get a work permit from the government is to keep away fraudsters. Without government restriction many individuals will put in place sub-standard Game4U Companies that do not have the required standards (Kotter 2001). Equipments, facilities and materials that are used by Game4U Company are not tax free; they are taxed by the government.
Game4U Company activities are intervened by the government. Matters concerning children are very sensitive towards the society. As a result the government ensures all the activities that take place at Game4U Company are beneficial and of great importance to the life of the youths. The government has implemented various laws and regulations that prevent drug dealers from selling drugs to the children who participate in Game4U games (Pearce 2005). The government also restricts Game4U Company from employing underage children. According to the labor law, it is illegal for a company to employ underage children. Game4U Companies that are found promoting child labor in their organizations are penalized and in extreme cases they may be closed down.
Economic factors
Since Game4U Company is an establishing business company, there are various business strategies that have been implemented and formulated to enhance the growth and expansion of the company. The company has lowered the charges that an individual must pay in order to participate in the games. The main objective of lowering the entry fee is to encourage more youths to join the Game4U Company. Lowering the entry fee is also a business strategy because it increases the number of customers participating in Game4U (Company Capron 2007). An increment in the number of participant increases the total revenue of the organization. When the total revenue exceeds the total input, the company makes a big profit. On the other hand profit increment promotes the growth and expansion of the company.
Social factors
On social matter, Game4U Company promotes the welfare of children by encouraging them to participate in games. Participation in games enhances the health of children as it prevents children from becoming obese. Games also promote the interaction of children among themselves. Socialization of children in the society is very important since it make them more complete as social beings. In addition, Game4U Company provides games to children during their free time thus limiting the chances of them involving themselves in drugs and other negative activities. The demand for Game4U Company services are on the rise in the society due to the positive impact the games have brought to the society. The company is considering introducing games to adult people since there are many adult people in the society who are addicted to drugs. Game4U Company can help in rehabilitating drug addicts using sports.
Technology
Game4U Company use technology incentives to increase the efficiency of the services it offers to children. The company also uses technology for intention purposes. The incorporation of technology in games has improved the services offered by the since it has became more efficient in service delivery. Technology efficiency has improved both quality and quantity of services provided by the company. The company can now service many children thanks to technology improvement.
Cash flow analysis
Cash flow analysis helps business entrepreneurs in studying the cash outflow and inflow of a business organization. The main reason of carrying out a cash flow analysis is to establish whether a business organization is profitable or not (Pearce 2005). In the case of Game4U Company, the amount of cash inflow is more as compared to the amount of cash outflow. The number of children participating in the games provided by Game4U Company is increasing dramatically. The trend is expected to continue in the near future, thus the total revenue of the company will continue to increase. On the other hand the cash outflow of the company also increases but at a lower rate as compared to the rate of cash inflow. Game4U Company uses some cash in maintaining equipments and in creating new technology. Thus the profit margin of the company will continue to increase.
Break even analysis
Break even analysis is a method that is mainly used by management accountants and production management to establish the financial stability of a business organization. In break even analysis the total fixed costs and the total variables are compared with sales revenue to determine the financial stability of a business organization (Obinson 2008). In the case of Game4U Company, the amount of cash incurred by fixed costs and total variable used in production purposes is below the amount of sales revenue collected. This indicates the level of sales level of the company is high and the company is run at a profit.
Reference
Pearce, J. and Robinson, R (2005) Strategic Management, 9th Edition, New York: McGraw-Hill.
Obinson, S., Hichens, R. and Wade, D. (2008) The directional policy matrix-tool for strategic planning, Long Range Planning Journal, Vol. 11, pp.8-15.
Capron, N. and Glazer, R. (2007) Marketing and technology: a strategic coalignment, Journal of Marketing, Vol. 51 Issue 3, pp.10-21.
Kotter, J. and Schlesinger, L. (2001) Choosing strategies for change, Harvard Business Review, pp.24-29.
