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External environment can be analyzed by scanning general and task environment, these
two levels of environments affect all aspects of company operations. In this section I will
examine some of the marketing and management techniques used by multinational organisations
to discover the multifaceted and indecisive exterior environment over the short, medium and
The analysis is divided in the following sections. See fig. 3.2, and is done by using PESTEL , porters
The External
Environment
Strategic Intent
Strategic Mission
General environment can be analyzed by using PESTEL technique. It identifies the most
important factors of the organisation and provides a check list of possible environmental
influences.
Adapted from Strategic planning 6th ed, John Wily and sons
The PESTEL framework primarily involves the two areas to consider, they include the
environmental factors affecting the organization and the important factors which are relevant in
the present context and in the years to come. It is used to identify few key active political,
technological, global, economic, demographic, and socio-cultural forces and how they are
shaping the overall environment in the country and around the globe.
Certain groups are found in environment that directly or indirectly affect or are affected
by the organizations operations, Task environment consists of those elements or groups that
directly affect the corporation and, in turn, are affected by it. The task environment is the
Market
Analysis
Community Competitor
Analysis Analysis
Supplier
Analysis
Selection of
Interest Group Strategic Factors Governmental
Analysis Analysis
Opportunities
Threats
Table 3.1: Elements of Task Environments
Customers They are the people who buy products and services. Segmented into business, home
and corporate. Organization should monitor customers changing want / need as it is
critical to business success.
Competitors They are organizations that produce similar good and services. Intensity of rivalry.
Company decides who the competitors are, anticipating competitors move, and
determining competitors strengths and weaknesses.
Suppliers They are the one who support in inputs such as labor, raw materials. Companies that
provide material ,human ,financial, information to other companies
Government They can be ones customer as well as the organization who may impose rules and
regulations that can impact on the organization
The
TheIndustry
IndustryLife
LifeCycle
Cycle
Industry Sales
Time
Drivers of industry evolution :
demand growth
creation and diffusion of knowledge
Evolution
Evolutionof
ofIndustry
IndustryStructure
Structureover
overthe
theLife
LifeCycle
Cycle
3.2 Micro-environment
3.2.1 Tangible Resources
Tangible Resources
Financial Resources
Financial The firms borrowing capacity
Resources The firms ability to generate internal
funds
The firms formal reporting structure and
Organizational
its formal planning, controlling,
Resources and coordinating systems
Physical Resources Sophistication and location of a firms
plant and equipment
Physical Access to raw materials
Resources
Technological Resources Stock of technology, such as
patents, trade-marks, copyrights, and trade
secrets
Technological Resources
Sources: Adapted from J. B. Barney, 1991, Firm resources and sustained competitive advantage.
Journal of Management, 17: 101; R. M. Grant, 1991, Contemporary Strategy Analysis, Cambridge, UK:
Blackwell Business, 100-102.
InnovationResources
Innovative Resources Ideas
Scientific capabilities
Capacity to innovate
ReputationalResources
Reputational Resources Reputation with customers
Brand name
Perceptions of product quality,
durability, and reliability
Reputation with suppliers
Sources: Adapted from R. Hall, 1992, The strategic analysis of intangible resources, Strategic
Management Journal, 136-139;
R. M. Grant, 1991, Contemporary Strategy Analysis, Cambridge, UK: Blackwell Business, 100-102.