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SM352 Strategy

SM352 Strategy. External Analysis 2 Far Environment, Nature of the Business Environment. The Strategic Process. Current Strategies. External Analysis. Key Issues. Strategic Options. Strategy Implementation. SWOT. Current Objectives. Internal Analysis. Reminder 1.

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SM352 Strategy

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  1. SM352 Strategy External Analysis 2 Far Environment, Nature of the Business Environment

  2. The Strategic Process Current Strategies External Analysis Key Issues Strategic Options Strategy Implementation SWOT Current Objectives Internal Analysis

  3. Reminder 1 • Environmental change has a major influence on the development and performance of business organisations • Objectives of environmental analysis: • To assess major changes in the external environment which impact on business • To analyse industry and markets and hence identify opportunities and threats

  4. Reminder 2 Industry and the Near Environment Markets and the Far Environment The Organisation

  5. Far Environment 1 • Also known as the macro-environment • The part of the business environment which has factors which influence the industry but over which the industry itself has little or no influence • The “givens” an organisation has to live with and adapt to

  6. Far Environment 2 • We have to identify the factors and trends which will have some effect on the industry in the near, medium and long term • We must also assess these factors and trends • which are the most important? • what is the impact? • what is the timescale? • major opportunities and threats

  7. Far Environment 3 • Examples of such factors: • Market globalisation • International terrorism • The “grey wave” • The internet

  8. Far Environment 4 • It is helpful to categorise information into different areas, for example into: • Socio-cultural factors/trends • Technological factors/trends • Economic factors/trends • Political/legal factors/trends • Other categories may be useful! • Environmental?

  9. Far Environment 5 • The socio-cultural environment: • Demographic trends • Income and wealth distribution • Social mobility • Spending patterns • Educational standards • Attitudes to work and leisure • Society’s attitude to business

  10. Far Environment 6 • The technological environment: • New discoveries and developments • Levels of investment in R&D • Speed of change and technology transfer • Quality • Ways in which products/services are delivered • Types of products • Manufacturing processes

  11. Far Environment 7 • The economic environment: • Economic growth rates • Inflation • Unemployment • Interest rates • Exchange rates • Taxation/government spending • Level of disposable income

  12. Far Environment 8 • The political/legal environment, e.g.: • Legislation/regulation • Nationalisation/privatisation • Fiscal and monetary policies • European Union • International relations • Local Politics vs National Politics

  13. Far Environment 9 • Compile a checklist - an environmental audit to identify and classify all influences • From the audit what are the key factors? • For each key factor what is the current and future impact on the industry?

  14. Nature of the Environment 1 • An organisation needs to understand the nature of the environment in which it operates (or intends to operate) • How complex is the environment? How easy is it to analyse? • How dynamic is the environment? Can our understanding keep pace with changes?

  15. Nature of the Environment 2 • As complexity and dynamism increase, so does the level of uncertainty • To be successful, organisations must take steps to reduce or cope with uncertainty

  16. Nature of the Environment 3 • Examples of factors which encourage dynamic and complex environments: • Technology • Television • Government Policies • Consumer Awareness • Global Trading • Low Entry Barriers

  17. Nature of Environment 4 • For many industries the environment is becoming more complex and dynamic • Simple, unchanging environment - analysis is easy and the future predictable • Dynamic environment - scan for trends and try to predict potential impact • Complex environment - gather wide range of information and develop analytical techniques

  18. Next Week: Analysis of the Near Environment

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