PEST Analysis of Depaul’s Proposed Homeless Centre in Newham

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A PEST ANALYSIS FOR HOMELESS AMONG 16 - 25 IN
NEWHAM
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Executive summary
Depaul is going to establish a centre in Newham borough to manage the homeless children of
age between 16 to 25 years. In order to establish a centre in Newham borough a PEST analysis is
required to be conducted. After economic recession, the economic situation of the UK has been
tilted considerably. As a result the UK government has to cut the find allocation in different
sector to balance the government deficit. The most affected areas of this economic recession are
identified to be the education sector and the healthcare sector. Although officially shielded from
direct budget cut fund to help homeless people aged between 16-25 years is difficult. This report
has performed a comprehensive PEST analysis to predict whether or not the Depaul can open a
new centre in Newham borough after facing different difficulties.
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Table of Contents
Introduction......................................................................................................................................4
Analysis...........................................................................................................................................4
Definition and importance of PEST analysis...............................................................................4
PEST table....................................................................................................................................4
Factors influencing the decision to open the centre in Newham borough...................................6
Political factors.........................................................................................................................6
Economical factors...................................................................................................................7
Social factors............................................................................................................................8
Technological factors...............................................................................................................9
Recommendation.............................................................................................................................9
Conclusion.....................................................................................................................................11
Reference list.................................................................................................................................12
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Introduction
PEST analysis is an analysis of the external environment of a company that is going to be
operated in a new environment. Depaul is a charity based organization which helps homeless
people in the UK. Nowadays, even in the stage of industrialisation, many people in the UK
remains in the homeless state; Depaul helps these homeless people. Depaul generally works with
homeless people of age between 16 and 25 and they are going to the centre in London Borough
(Depaul, 2019).
Analysis
Definition and importance of PEST analysis
PEST analysis is an analysis of the external environment where a business organisation is going
to start their business.
The significance or importance of the PEST analysis lies in its capability of broad domain
analysis. Four most influential factors are covered within the PEST analysis namely political
factors, Economic factors, Social factors and Technological factors. From the analysis of
political factors, ease of doing business in a particular region can be judged, whereas, from the
analysis of economic factors, the economic situation of a particular region can be judged, based
on which product price is determined. Technological and social factors determine the
sustainability of the business (Cohen and Watt, 2017).
PEST table
Political  Hackney JSNA prioritising
working with young people
 CCG has funded 2 new
hotels to open in 2020
 The Government’s austerity
programme
 Hackney’s inequality and increased
poverty
 Hackney’s decision to close some of
their youth centres
 What are the priorities
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 The Government’s reduction in
Hackney’s Revenue Support Grant
Social  Hackney has a high
number of young homeless people
(130) in 2017
 Reduction in the number of workers
in the sector
 Increase in the number of homeless
16-25( how many 5 years ago and
how many now)
 Demographic
 Culture
Economic  Hackney has committed
£2 million to tackle youth
homelessness over a 4
Year period.
 Economic impact of the
Government’s austerity programme
 Reduction in Hackney’s Revenue
Support Grant
 Impact of universal credit on
Hackney’s rented community
Technological  Hackney has
created an app that
gathers information
on homelessness
and is aimed at
young people at risk
Of homelessness.
 Effective use of SMART phones to
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contact homeless young people
 Use of Ipad to record information
regarding the homeless young
people contacted
 IT to collect data on the number of
homeless in the borough
Table 1: PEST table
(Source: Created by author)
Factors influencing the decision to open the centre in Newham borough
Political factors
Political factors play a vital role in business development. In this study, government rules and
policies create a deep impact on the business of Depaul.
Government austerity programme
One of the most important issues of political factors is different government policies and
regulations. In this context, the UK government adopts different government policies that affect
the business growth of an organization. Depaul is most popular health care industry that deals
with housing accommodation for homeless people. This concerned firm well concerns about
their business growth. In the words of Sammut‐Bonnici and Galea (2015), PEST analyses can the
effect of political factors for their business growth. The UK government adopts Government
Austerity Programme to recover economic disparities. In this programme, the focus is on the
reduction of public expenditures, tax rises, and government budget deficiencies. In the words of
Wiggan (2017), this programme emphasizes on housing and homelessness issue. The
government reduces home loan taxes by this programme. This aspect helps the concerned firm to
expand its business to make more profit in the UK market. This company builds home for the
youth people who are between the age group of 16 to 25. In 2016, homelessness is increased by
16% in the UK. This issue helps Depaul to make more homes for young people who belong to
the age group of 16 to 25.
Hackney’s inequality and poverty
Hackney’s poverty and inequality has a vital impact on Depaul’s business environment. UK
government policies regarding economic condition create inequality among peoples. As
suggested by Castaño et al. (2015), inequality in financial condition creates disparities in
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affordability, which affect the business of the concerned firm. In such a case, Depaul is restricted
from building more houses for homelessness because people cannot afford houses, as house tax
is high. In addition, increasing poverty reduce the level of profitability of the concerned firm.
Poverty decrease affordability as well as demand. Depaul’s business is driven low by increasing
poverty in the UK.
Economical factors
Hackney council has reported to tackle homeless youth (aged between 16 years and 25 years) for
four years, although the amount of support grant is reduced. The reduction of support grant for
the youth homelessness people can be reflected as a negative factor while Depaul is going open
its subsidiary in Newham borough. Without having proper economic support, Depaul cannot
open their centre in Newham borough and hence it will become problematic to open their centre
in London borough. The economic issue can ruin their possibility of sustainability in the
Newham borough area and an economic cautious is recommended. Despite this negative effect,
Hackney's contribution of 2 million pounds may become beneficial for Depaul to open their
centre in London borough (Hackney, 2019). Despite the reduction in support grant, these 2
million pounds can become hugely contributory at least in the establishment in the Depaul’s
centre in London borough (Newham borough). Newham borough area is affected by a significant
number of homeless people and hence, establishing a centre in Newham borough can become a
trial solution to the homelessness problem in the UK.
Another economic issue that has been identified in the economic impact of the Government’s
austerity program for youth aged between 16 and 25 (BBC, 2019). After the economic recession,
an austerity programme has been initiated to manage the deficit of the annual income of the UK.
In other words, the UK government has reduced the amount of money in different domains and
hence the expenditure behind the homeless people (aged between 16 and 25 years) has been
decreased. It is impossible for a charity organisation to continue its operation in an affected state.
The condition becomes worse when a company is going to start up in a new area. In the case of
Depaul, which is going to start their operation in Newham borough, it will be more problematic
as they have no previous operation to operate in that area.
As a result of the economic recession, the amount of tax is increased by the government, to
reduce the government budget deficit. The National Health Service and the education sector of
the UK are fenced to protect these two vital sectors from direct economic cuts (Watt, 2018).
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Despite this shielding initiative undertaken by the UK government, money flow has been
substantially reduced in these two sectors, thereby creating problems in the healthcare sector.
Owing to this reason, Depaul is going to face a stringent economic problem while they are going
to open their centre for the youth of 16 to 25 years age in London Borough (Newham borough).
In the future, the economic condition may be worsened due to the fall in the value of pounds and
hence, Depaul needs to conduct a situational analysis to predict the nature of the problem they
would face in near future and take decision about opening their centre accordingly (Watt, 2018).
Social factors
PEST analysis of Depaul shows how social factors affect in its business environment.
Reduction in the number of the sector
It can be said that the reduction of the number of workers in the Depaul organisation can
decrease its business as this company has a vast area of its business. In the words of Aithal
(2017), workers are the main power of an organisation to fulfil all the business requirements. Not
only has the number of the worker but also the loss of efficient workers caused low productivity
for Depaul. Government rules, social inequality, low salary structures are the main cause of the
reduction in the number of workers in Depaul. The concerned firm is dealing with health care.
As suggested by Moro Visconti 2016, lack of interest and opportunities in the health care
industry, employees are leaving this sector. On the other hand, interesting salary structure, job
security also attracts the employee of Depaul, which reduce the number of efficient employee in
their company. In this context, the concerned firm cannot expand their business all over London.
Culture
Depaul wants to expand its business in London borough. London enriches with the high culture
of different aspect. In the words of Kim and Park 2016, peoples in London are well concern
about their culture and living pattern. Depaul works for those homeless young people, who are
between the age of 16 -25. In London, the mentioned age groups are self-dependent and rigid for
their culture. Some of them are not willing to go to the centre for homeless people, which are
provided by Depaul. It can be said if young people do not prefer such a centre, which are
introduced by Depaul, the business of the concerned firm can be reduced. On the other hand,
London does not belong to the same culture; each of the cultures has different view about
homelessness. Diversity in culture can restrict the business growth of the company Depaul.
Technological factors
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Hackney council has created a mobile application that collects information about young
homelessness people aged between 16 and 25 years. This mobile application can become
advantageous for Depaul as they are going to open centre in London borough. Collection of
information about youth and homeless people will help the charity organization to devise a
prompt action strategy. Information about the exact situation and exact numbers of the homeless
youth people (aged between 16-25 years) will be a convenience to open a centre in Newham
borough. The mobile-based application can come in a miniature size and is easily accessible
from any place, in any time and the wireless facility of the application provides ease of access. It
will thus become advantageous for Depaul to operate in the Newham borough area for the
availability of information about the number of homeless people aged between 16-25 years.
Smart phones and tablets have become essential parts of the day to activities of humans. In a
developed country like the UK, the usage of smart phones becomes more prominent. A
considerable amount of the total population in the UK use iOS operated devices. By using smart
phones and mobile application developed by Hacken, Depaul can easily reach thousands of
youth homeless (16-25 years) within a short duration of time (Fuentelsaz et al. 2015). Modern-
day smart phones are enabled with e-mail and cloud memory so that these people can access any
information instantaneously. The modern-day smart phone additionally uses wireless and Wi-Fi
networking system to initiate communication where ever a communication network needs to be
established. One additional criterion that smart phone offers is synchronicity. News, when posted
in a network, can become easily accessible to all of the people using the mobile application,
developed by Hacken.
Recommendation
❏ The great recession has affected the condition of the UK environment both economically
and politically. The Government of the UK has to take tough decision to manage the
deficit in the governmental budget and hence they have reduced the allocated fund in
different public sectors. Private sector business is also affected by the harsh economic
downturn as well as a political countermeasure to overcome the situation. Although the
education and healthcare sector is shielded from direct revenue cuts due to the economic
recession, the sharp teeth of the economic downturn have penetrated the healthcare and
education sector. It can be justified by the fact the problem in expenditure in the
healthcare sector of the UK. In this context, it is recommended to decide the type of
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service first according to the analysis of the current situation. Based on the analysis, the
nature of the service needs to be decided.
❏ Technically the UK is in a very advanced stage. Technology can thus become a
determinant factor in opening the centre in Newham borough by Depaul. Already Hacken
has implemented a mobile application to initiate their information gathering process.
However, with an increasing amount of data volume usage of cloud-based systems is
increasing. Although a prominent effect is seen in the service provider's end, users are
now using cloud applications in a more prominent amount. Cloud-based systems are less
secured compared to conventional solid-state systems sue to weal interface. A security
breach can happen at any time while using cloud-based systems and hence tight security
protocol is recommended to be established while Depaul is going to launch their centre in
Newham borough. In addition to the interface issue, cloud-based systems have another
issue namely the authentication issue. In general, in a computing environment,
multifactor authentication is required whereas, in a cloud-based computing system, only
single-factor authentication protocol can be implemented. Modern-day cloud-based
systems have developed two-factor authentication protocol for verification of user
identity, however it not enough to restrict virus attack. Henceforward, Depaul has to
implement an intranet server supporting end-to-end encryption protocol to avoid any type
of virus attack.
❏ Economically, fundraising is another issue that is required while opening a centre. Such
fundraising activities have been halted by the economic downturn in the UK, owing to
which various community activities of UK has become halted. Therefore, it is
recommended for Depaul to run an analysis of the economic condition of the UK
beforehand they step foot in Newham borough
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Conclusion
In light of the above discussion, it can be concluded that Depaul will face different kinds of
issues while establishing a centre in Newham borough. The prominent issue will come from the
economic downturn which is better known as economic recession. In addition to that, the
economic recession has also induced political interference in the business process of
organizations. The amount of fund has been cut by the government has been cut and hence it will
become a problem for Depaul. However, the social and technological condition will serve as an
advantage while Depaul is going to establish a new charity centre in Newham borough.
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Reference list
Books
Cohen, P. and Watt, P. eds., 2017. London 2012 and the post-Olympics city: A hollow legacy?.
Berlin: Springer.
Websites
BBC.(2019).United Kingdom government austerity programme. Available at:
https://www.bbc.co.uk/programmes/topics/United_Kingdom_government_austerity_programme.
[Accessed 7/4/2019].
Depaul. (2019). Homelessness has no place. Available at: https://uk.Depaulcharity.org/
[Accessed 9/4/2019].
Hackney.(2019). Social support. Available at: https://hackney.gov.uk/ [Accessed 10/4/2019].
Journals
Castaño, M.S., Méndez, M.T. and Galindo, M.Á., 2015. The effect of social, cultural, and
economic factors on entrepreneurship. Journal of Business Research, 68(7), pp.1496-1500.
Kim, M.J. and Park, S.K., 2016. Strategies to Improve Functional Competency and Effectively
Respond to Environmental Changes of Environment, Health and Safety (EHS) Team in
Companies. Journal of the Korean Society of Safety, 31(2), pp.104-111.
Moro Visconti, R., 2016. Healthcare public-private partnerships in Italy: Assessing risk sharing
and governance issues with PESTLE and SWOT analysis. Corporate Ownership and
Control, 13(4).
Sammut‐Bonnici, T. and Galea, D., 2015. PEST analysis. Wiley Encyclopedia of management,
pp.1-1.
Sammut‐Bonnici, T. and Galea, D., 2015.PEST analysis.Wiley Encyclopedia of management,
pp.1-1
Watt, P., 2018. “This pain of moving, moving, moving:” evictions, displacement and logics of
expulsion in London. L'Anneesociologique, 68(1), pp.67-100.
Watt, P., 2018. Gendering the right to housing in the city: Homeless female lone parents in post-
Olympics, austerity East London. Cities, 76, pp.43-51.
Wiggan, J., 2017. Contesting the austerity and “welfare reform” narrative of the UK
Government: Forging a social democratic imaginary in Scotland. International Journal of
Sociology and Social Policy, 37(11-12), pp.639-654.
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