BHI is a consumer healthcare business largely selling over the counter products. In the year to March 2005, BHI reported net revenues of 523m (+4% on 2004) and Operating Profit of 88m (+9% on 2004).
PEST Analysis. A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. (Vitale 2001, p. 27) Speaking about the political factors of the merger to take place, the principal ones to consider are trade regulations and tariffs, as BHI performs business in the three different locations all over the world, as well as such merger may be taken as the striving of both company for creating a monopoly. Taxation should also be taken into account; however, as BHI itself used to successfully run all three businesses, and the European Commission has approved on the merger, these factors are not threats here, though should be kept under control. Economic factors are also present here, as the merger presupposes intervention into business in other countries; however, as far as the businesses perform successfully, there is no threat of getting into worse infrastructure quality or facing difficulties with employment; Reckitt Benckniser has to closely consider the skill level of workforce, especially in business unit operated by BHI in Thailand, which may appear an opportunity for quality improvements. Social and technological factors here don't represent any significance, as the businesses have been performing for a certain period of time and have both acquired stable position on the market. From the social viewpoint the merger may offer salary improvements for the workers, while higher forecast profits will contribute into technological innovations and thus better cost-effectiveness of production.
Identifying PEST influences is a useful way of summarizing the external environment in which business operates. However, it must be followed up by consideration of how a business should respond to these influences.
Speaking about more political factors, which may potentially influence the merger, it should be noted, that the healthcare area is becoming the object of closer attention on the side of the governmental structures. In order to comply with the requirements of the healthcare and environmental legislation of the country, as well as globally, it is first of all, necessary to closely study the legislation of each country. In order to make the compliance with the legislation better and closer, it will be useful for the merger to organize public campaigns which will let the consumers know about their products through the actions in relation to public hygiene and healthcare. The company has to follow up the necessity to install independent monitoring systems to ensure the compliance with the environmental legislation.
Economic factors should be viewed on the side of expenditures per capita. With the planned growth of revenues 1 billion, and the desire of Reckitt