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IAI Actuarial Core Principles · Business Management · Communicating strategy; culture and structure in decision making; strategy case studies

In a strategy case study on Himalaya Insurance, the firm built a strong brand and low costs, but a new regulation sharply cut permitted commissions, undermining its agent-driven distribution. A PEST analysis of this event would classify the key external change as which factor?

The change is a political and legal factor in a PEST analysis, because it arises from new regulation limiting commissions. It is an external force affecting Himalaya's distribution model, not an internal strength or a mainly economic, social or technological development.

  1. APolitical/legalCorrect
  2. BEconomic only
  3. CSocial only
  4. DTechnological only
  5. Internal strengths

Explanation

A change in regulation is a political and legal factor in PEST. It affects the firm externally, so it is not an internal strength, and it is not primarily economic, social or technological even if it has knock-on effects.

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