ASSIGNMENT NO # 03

NAME : S/LT ABDUL HANNAN ANJUM

P NO : 9769
SUBJECT : STRATEGIC MANAGEMENT
SEMESTER : 10TH BS (MIS)
CLASS : 2014-A
QUESTION NO 1: Write short notes on the following also give examples of each related
to Pakistani external environment:

 ECONOMIC FORCES
Economic forces are the factors that help to determine the competitiveness of the environment in which the firm operates

These factors include:

 Unemployment level
 Inflation rate
 Fiscal policies
 Government changes

These factors determine an enterprise’s volume of demand for its product and affect its marketing strategies and activities. The economic system
is made up of three main steps. The first one being production and then there is distribution of the produced goods and then the last step is
consumption of the same. Now all this is possible because of two factors- Human resource and Natural resource.

Natural resources include the raw material which is generally used in the production process, and human resources help to convert the raw
materials to finished products which are then ready for distribution.
EXAMPLE:
Where a firm pollutes and throws its waste in a private pond. The owner of the pond may charge the firm the polluting cost and the firm has to
pay. But if the same firm dumps its waste in a river, it does not have to pay anything as the river is a public good. But the dumping of the waste in
the river causes many environmental problems. It damages the aquatic life, may lead to a lower water standard and health problems.

Hence to reduce the pollution emissions from these firms in water and air, a pollution tax can be charged from these firms which can be indexed
(in slabs) in accordance of the pollution level done by the firms.

 Social, Cultural, Demographic & Environmental

Forces
Social, cultural, demographic, and environmental changes have a major impact upon virtually all products (Preferences change), services,
markets, and customers. Small, large, for-profit, and nonprofit organizations in all industries are being staggered and challenged by the
opportunities and threats arising from changes in social, cultural, demographic, and environmental variables.

EXAMPLE:
Consider Pakistan—
 Population growing older
 Increase in younger population
 Ethnic balance changing
 Gap between rich and poor widening

Ethnic balance changes due to the migration of the people from different areas to different areas. This affects the ethical behavior very much. As
the traditions and norms are very much different in different areas of Pakistan, therefore the behavior of the migrated people also have a major
affect on the behavior of the resident people. Due to the increased gap between rich and the poor, there is a tremendous change in the social
behavior of the people.
___________________________________________________________________________________________________________________

 Political, Governmental & Legal Forces

Political, governmental and legal factors represent key opportunities or threats for both small and large organizations. Is important to know
about political regulations in our country, if we want to promoting products or services in other countries.
Government Regulation
 Key opportunities & key threats
 Antitrust legislation (Microsoft)
 Tax rates
 Lobbying efforts
 Patent laws

There is always change in government regulations which create opportunities and threats also.

For Example antitrust legislation where there is an effort to ban the monopolies. Some organizations think that monopolies should be
banned. Similarly, tax rates and lobbying efforts for special, lobbying entries are those efforts which are made in order to pass special resolution
laws of their own choice. Patents law and intellectual are also relates to the same stories. Increasing Global Interdependence:

Impact of political variables ƒ

 Formulation of Strategies ƒ
 Implementation of Strategies
 Strategists in a global economy ƒ
 Forecast political climate
 Legalistic skills ƒ
 Diverse world cultures
___________________________________________________________________________________________________________________

 Competitive Forces
“Collection and evaluation of information on competitors is essential for successful strategy formulation” Competition in virtually all industries can
be described as intense.

Identifying Rival Firms: ƒ

 Strengths ƒ
 Weaknesses ƒ
 Capabilities ƒ
 Opportunities ƒ
 Threats ƒ
 Objectives ƒ
 Strategies
Factors that influence the competitive position of a company in an industry or market. Competitive forces include

 Bargaining power of the buyers and suppliers,

 Threat of new entrants
 Rivalry among existing companies.

 Technological forces
The influences that developments in technology have on consumers, business and society in general. Some positive technological forces include
increased leisure time, improved communication and better management information systems, while some negatives might include increased
unemployment and information abuse.

EXAMPLE
Technological Environment means forces that create new technologies, creating new product and market opportunities. Japan is a good example
of technological environment because it is known for its high technology and it has its distinct market. This is especially true when one sees the
cell-phone market in Japan. Cell phones are must have gadget to Japanese, especially for people in Tokyo where they spend majority of the day
outside of their home.