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What is five forces analysis
Aspects 0f pest analysis
What is five forces analysis
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Tesco marketing strtegy Incomplete PART ONE STRATEGIC ANALYSIS Managers face difficulties in trying to understand the encionment. First ¡°the environment¡¯ encapsulates many different influences; the difficulty is making sense of this diversity in a way which can contribute to strategic decision making. The second difficulty is that of uncertainty, managers typically claim that the pace of technological change and the speed of global communications mean more and faster change now than ever before. 1.Analysing the environment 1.1 Auditing Environmental Influence------PEST Analysis As a starting point, it is useful to consider what environmental influences have been particularly important in the past, and the extent to which there are changes occurring which may make any of these more or less significant in the future for the organization and its competitors. PEST Analysis involves identifying the political, economic, social and technological influences on an organization. It is increasingly useful to relate such influences to growing trends towards globalizations-of possible futures, to consider the extent to which strategies might need to change. 1) Political/legal - Monopolies legislation - Environmental protection laws - Taxation policy - Foreign trade regulations - Employment law - Government stability 2) Economic factors - Business cycles - GNP trends - Interest rates - Money supply - Inflation - Unemployment - Disposable income - Energy availability and cost 3) Socio cultural factors - Population demographics - Income distribution - Social mobility - Lifestyle changes - Attitudes to work and leisure - Consumerism - Levels of education 4) Technological - Government spending on research - Government and industry focus on technological effort - New discoveries/development - Speed of technology transfer - Rates of obsolescence 1.2 The Competitive Environment-------Five Force Model The next step in environmental analysis is moves the focus towards an explicit consideration of the immediate environment of the organization-for example, the competitive arena in which the organization operates. Five-force analysis provides a means of identifying the forces which determine the nature of the competitive environment, especially in terms of: 1) Barriers to entry. 2) The power of buyers. 3) The power of suppliers. 4) The threat of substitutes. 5) Other reasons for the extent of competitive intensity. 1.3 Identifying The Organization¡¯s Competitive Position---------Strategic Group Analysis STRATEGIC GROUP ANALYSIS The next major step in environmental analysis is analysis the organization¡¯s competitive position that is how it stands in relation to other organizations competing for the same resources, or customers, as it. One problem in analyzing competition is that the idea of the ¡°industry¡± is not always helpful because its boundaries can be unclear and are not likely to provide a sufficiently precise delineation of competition. Strategic group analysis aims to identify organizations with similar strategic characteristics, following similar strategies or competing on similar bases.
With forward movement in society, it is important to consider not just what will propel most toward success, but also what will help to sustain the environment along the way. What may have been considered appropriate decades ago, may no longer be socially acceptable due to the changes observed in both the business world and the environment (Fiske, 2010). Therefore, it is important for organizations thriving in today?s economy to consider how they may capitalize most effectively from their product or service of choice while minimizing or eliminating any damages along the way (Knoke, 2012).
To perform the Industry Analysis it is better to follow Michael Porter's five forces model. This analysis framework was created so that it helps managers in their task to analyze competitive forces to the company. (Hill & Jones 80) This model is only one of the models that can be used for this task but it is one of the more popular models. The five forces that we will have to look at for this model are (1) the risk of new and potential competitors; (2) the bargaining power of suppliers; (3) the threat of substitute products; (4) the bargaining power of buyers; and (5) the degree of rivalry among established companies within an industry. (Hill & Jones 80)
Technological change, change in economic climate, natural occurrences and such-like are matters that concern the macro-environment of a business. These external, uncontrollable, influences can and will impact hugely on the success or failure of a business. One of the tools that are applicable in considering these factors is PESTLE. Political; Environmental; Social; Technological; Legal and Economic considerations will need to be engaged in order to prepare the business for macro-environmental influences. For this reason, PESTLE will be the most appropriate tool to use to identify and outline the main macro-environmental factors that may affect my business.
The two environmental factors that affect my company will be one internal which is training and second one is external the competition. As working for Bank of America I know that the internal environmental factor that is need to be improved is the training. The management and the executives have to make decision about to make the training a little bit affective. As being new employee it is very hard to help customers with their financial needs because there is not enough training and information that new trainees can learn to help their customers. It is hard decision to make because the learning time will take longer. Even though, the new employees will have more knowledge, but the company will loos the money and time on spending on them.
Tesco is one of the best known names in the high street. It is a large public limited company (plc) with approximately 165 000 shareholders. By 1995, Tesco had become the largest food retailer in the UK, overtaking Sainsbury's. The company operates over 800 stores throughout Europe.
Porter’s competitive forces model includes five forces that need to be analysed. These forces include the intensity of rivalry from traditional competitors, threat of new market entrants, threat of substitute products and services, bargaining power of customers and bargaining power of suppliers (Laudon & Laudon, 2007). See diagram below;
Environmental scanning is the acquisition and use of information about events, trends and relationships in the organization’s external environment (Choo, 2001). This information can then be used in the planning of future actions for an organization. There are many variables that contribute to environmental scanning, including, natural, societal and task environments (Wheelen & Hunger, 2012). In the case of Yahoo, Inc. the following external factors had major influence in the struggle the company has faced recently: technology advancement, changing pace of life, and competitor analysis.
Environmental scanning is the process of gathering information about events and their relationships within an organization's internal and external environments. The basic purpose of environmental scanning is to help management determine the future direction of the organization (Barnat, 2004). For a business to succeed, it is important to study the business environment of the firm that consists external and internal influences that affect the firm’s decisions and performance (Grant, 2010). Environmental scanning includes the assessment of Macro and Micro environmental analysis.
Specifically, it analyzes the major factors within a specific industry. The user can define the “industry” as broadly or as narrowly as is most appropriate for each business. The “five forces” are competition, threat of new entry, suppliers, buyers, and substitutes. Overall, it provides an idea of how attractive an industry is for new entrants or can provide an idea of where a particular business sits within the landscape of that industry. It is important for Casa San Ysidro to understand where they fit within the competitive landscape and what forces could affect their position in years to
In the future, employing organizations will face a wide range of issues and challenges in meeting their workforce requirements. These periods of difficulties generally will center around the effects of external environmental influences on the organization and the manner in which it manages ongoing issues. Many of these external factors filter down and influences an organizations roles and responsibilities for talent scarcity, changing products or services, shifting demographic composition and their consumer preferences, etc.
This identifies the main micro-environmental influences by classifying them into six groups: Political, Economical, Sociocultural, Technological, Environmental and Legal. By applying this framework to Ryanair it is possible to summarise the key forces in the general environment (see appendix A) likely to present opportunities and threats to the organisation (Johnson & Scholes 2002).
Environmental analysis is a strategic tool. It is a process of identifying all the external and internal elements, which can affect the organization’s performance. The analysis entails assessing the level of threat or opportunity the factors might present. These evaluations are later translated into the decision-making process. The analysis helps align strategies with the firm’s environment.
Analysis of the external environment is very important for the development strategy of the organization and a very complex process requiring a process tracking and assessment factors and also the establishment of links between those factors and the strengths and weaknesses as well as opportunities and threats. External environment has its complexity and uncertainty. It is obvious that without knowing the environment the organization can not exist. The organization studies the environment in order to secure a successful progress towards its goals.
Environmental factors cater for the protection of the environment. A business must carefully be able to look at its surroundings to see for benefits and ensure that its daily production does not interfere with society.
A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. Such external factors usually are beyond the firm's control and sometimes present themselves as threats. For this reason, some say that "pest" is an appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation sector: