Lecture Week 2 Assessing The Strategic Position. The External Situation Part 1
Learning Outcomes
To be able to describe the forces in the macroenvironment of an organisation using PESTEL and a range of other frameworks Understand key drivers for globalisation and frameworks for National Com etitive !dvantage "e able to develo Scenarios and e# lain their im lications
The Macro-Environment
• Diversity-Many di erent in !uences • "o#$!e%ityKey PESTEL &nterconnected drivers in !uences • S$eed o chan(e Scenarios
Particu!ar!y &")
PESTEL analysis of the macromacro-environment
There are many factors in the macro-environment that will effect the decisions of the managers of any organisation$ Ta# changes% new laws% trade barriers% demogra hic change and government olicy changes are all e#am les of macro change& To hel analyse these factors managers can categorise them using the PESTEL model&
Social factors. Changes in social trends can im act on the demand for a firm-s roducts and the availability and willingness of individuals to work& 0n the U3% for e#am le% the o ulation has been ageing& This has increased the costs for firms who are committed to ension ayments for their em loyees because their staff are living longer& 0t also means some firms such as !sda have started to recruit older em loyees to ta into this growing labour ool& The ageing o ulation also has im act on demand$ for e#am le% demand for sheltered accommodation and medicines has increased whereas demand for toys is falling&
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Technological factors New technologies create new roducts and new rocesses& 1P4 layers% com uter games% online gambling and high definition T5s are all new markets created by technological advances& 6nline sho ing% bar coding and com uter aided design are all im rovements to the way we do business as a result of better technology& Technology can reduce costs% im rove )uality and lead to innovation& These develo ments can benefit consumers as well as the organisations roviding the roducts&
Technological
. /overnment s ending on research . /overnment and industry focus on technological effort . New discoveries 7develo ments . S eed of technology transfer . 8ates of obsolescence
Macroenvironment – PESTEL "!
Sociocu!tura! )echno!o(ica!
• +overn#ent s$endin( on research • +overn#ent and industry ocus on techno!o(ica! e ort • 4e. discoveries 8deve!o$#ents • S$eed o techno!o(y trans er • 9ates o o,so!escence
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Le(a!
"o#$etition !a. E#$!oy#ent !a. ;ea!th and sa ety Product sa ety
What Are Key Drivers for Change? Key drivers for change are environmental factors that are likely to have a high im act on the success or failure of strategy&
Scenario P&annin cont.
Step "ne: 0dentify between @ to A key trends ? +rom PESTEL7+05E +orces etc Step Two: 0dentify and list forces likely to have an high im act on the industries future develo ment& 9list as many as you can think of: Step #: S lit these into two categories$ 'hich of these are Certain Uncertain Step $our: 0dentify different ossible futures by each of the factors with the highest likely im act and the greatest uncertainty 9try to come u with 4 to @: Step $ive: +or each of the above in ste B identify in columns
"ig Positive change 9i: CDDD EDDD C& "enign Change E& 1oderate Change 4& <ostile Change No Change9ii: "ig negative change9iii:
Step Si%: +inally develo the scenarios based on the three ossible future states for a
See e#am le in core te#t e# loring cor orate strategy and "lackboard week E
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+n(ustries an( Sectors
Industry @ a (rou$ o ir#s $roducin( the sa#e $rinci$a! $roduct, e2(2 #o,i!e $hones Sector @ a (rou$ o or(anisations $rovidin( the sa#e 7inds o services, e2(2 hea!thcare
)hanging -oun(aries of +n(ustry
Convergence
Previously se arate industries begin to overla in activities% technologies% roducts and customers Su ly-led% e&g&
bundling and unbundling of sectors in ublic services e#ternally driven by government regulation e#ternally driven by e-commerce trends
Competitive forces in the industry$
2etermine attractiveness of industry !ffect the way individual com anies com ete 0nfluence decisions on roduct7market strategy
2emand-led% e&g&
Substitution of one roduct by another Customers want bundling of com lementary roducts
)om.etitiveness
"usiness
/aining advantage over com etitors
Com etitive advantage
Environment Part ! Key Points
PESTEL identifies key drivers of change Scenario lanning involves building u on a PESTEL analysis to hel develo strategies by redicting future uncertainties on im ortant drivers in terms of their environmental forces and levels of im ortance Environmental analysis identifies o ortunities and threats Scenario "uilding Portfolio !ssessment NoE
Public sector
2emonstrable e#cellence in service delivery
6ssess attractiveness o di erent industries8sectors &denti y sources o co#$etition in an industry8sector