1. What is meant by the term "External Analysis"? What
is the purpose of PESTLE analysis?
·
The term external
analysis study and investigate opportunities and threat that exist in the
environment. The procedure of distinguish strength or weakness from an
opportunity or threat is to ask (inquiry): Will this issue be exist if the
company does not exist? If the answer is 'yes", it could be referred as
external to the firm. Opportunities
refer to positive conditions in the environment that may perhaps fabricate
rewards for the organization if acted properly, which may be the competitive
advantage of firm from others whereas Threats refer to conditions or barriers
that may prevent the firms from reaching its objectives, which is difficult to
control by the firms.
·
There
are two types of external analysis. First one is general environment (macro)
which examines and investigates the issues like demographic (age, population
growth), economic indicators (inflation, GDP Growth, Interest rates), government
regulation, etc and second one is industry environment (micro) which examines
and investigates the issues like market and consumers, substitute products, the
industry, the new entrants, etc What Industry(s) should we as a company be
in? Which industries have the highest
profit potential? How can we, as a company, manipulate industry forces to
create or enhance our competitive advantage?
Ø PESTLE
analysis is a
helpful strategic management tool for understanding the “big picture” of the
environment in which the firm is operating. It also helps understanding the
risk linked with the market (the need for a product or services) decline or growth,
and as such the position, direction and potential for an individual business or
organization.
PESTLE Factors are political,
Economical, Sociological, Technological, Legal and Environmental. By
understanding these environment firm can take advantage of maximizing the
opportunities and minimizing the threats of the organization. Different other
similar acronyms have been used including STEP, PEST, ETPS and STEEPLE. The
term PESTLE is particularly popular on introductory marketing and HR courses in
the UK.
The purpose of PESTLE analysis
is:
ü To make the effective Strategic
decisions.
ü To understand the present
condition of business.
ü To look after the future impact
of an organization by recognizing the past and present impact of environment
factors.
ü To minimizing the threats and
maximizing the opportunities by understanding the PESTEL Factors.
ü Strategist can identify risk
associated with the firm and use their knowledge and ideas to overcome such
risks.
ü For example: Recent rules of
traffic of Nepal have been changed that no one can drink and drive vehicles in evening
time and the speed cannot be exceed to 60 km in Bhaktapur to Banepa Roadways.
Finally number of the accidents was decreased which is a positive sign of
country to develop.
Thus, PESTEL analysis is an
important and widely used strategic management tool which helps business or
firm to understand the external factors.
2.
Read the article about the Big
Mart Super Store- What external issues are the supermarkets would have to
consider at the time to have competitive advantage over others?
·
As
we know Supermarket purchase goods and services to run their operation and
resale them in market. Supermarkets should need to understand the customer
demands about product and services. Which items is selling more in quantity?
What type of discount should we offer to motivate the customers?, etc. To be
competitive than others supermarket should need to develop innovate change from
time to time. Innovative change may be change in technological, customer
responses, managerial or organizational; these thinks should keep in mind to be
competitive in the market.
The external issues which
supermarket would have to consider at the time to have competitive advantage
than others are as given below:
§ Competition
from other vendor (competitors)
As we know today’s customers are
very clever of selecting the store they first understand the prices differences
between one to another store. When competitors sell products and services even
$5 lower price than other who sells same product in the supermarket gets
affected and become a great challenge for the retailer of supermarket. So to
get rid of these supermarkets need to be familiar and monitor different
strategies and activities of competitors.
§ Economic
viewpoint.
Each economy differs from one
another. It is because of purchasing power of the people in the respective
country. Supermarket needs to understand economic condition as well as standard
of living of the people of the nation. Purchasing power of a particular country
or of people determines whether it is pros or cons for selling the goods and
services to the supermarket. Hence it is necessary for supermarkets to observe
and understand and be familiar to have a competitive position in the market.
§ Political
and Legal condition.
Political scenario plays an
important role to operate a business in an economy. Favorable political
condition means the favorable business environment or vice versa. Political
stability increases the purchasing power and standard of living and provides
positive impact in the business environment.
§ Balance
of Level of demand and supply.
Supermarket need to think about the level of
demand and supply. It is necessary to forecast the demand of the customer, by
considering the demand supply should be made, if there is excess supply then we
need lots of space to keep the products which decrease the profit margin or if
there is excess demand than Supermarket unable to provide the goods and
services which is also not beneficial. So, appropriate balance is essential to
be competitive in the market.
So, above things needs to be
remember and understand to have competitive advantage from others.
3. Discuss your preparations for the Activity
Week field work. Have you arranged to meet your group? Have you been to the Big
Mart before? How are you planning to record your data?
·
Yes, I have arranged to meet my group, I have
formed a team; we are five members in our group. We went to Big mart in city center, civil mall to gain more information about big mart in Nepal. I have studied the behavior of customer over there,
ticket purchasing style.
·
We visited these Big-mart movie hall different times.
Most usually we visit city center(Big Mart) located near our college, price of the product and services is economical and quality is good as well.
·
We are planning to record the total number of
customer per day, total sales, number of customer who visit most often, etc. I
have made plan to visit other Big Mart to gain more information and to present
analytically to the class, so that everybody can understand.
References:
References:
1. Daft, R.L., and K.E. Weick. 1984. Toward a model of
organizations as interpretation systems. Academy of Management Review 9:
284-295.
2. Dess, Gregory G. 1987. Consensus on strategy formulation
and organizational performance: competitors in a fragmented industry. Strategic
Management Journal 8: 259-277.
3. Eisenhardt, Kathleen M. 1990. Speed and strategic choice:
how managers accelerate decision making. California Management Review (Spring):
39-54.
4. Harari, O. 1994. Beyond the "vision thing."
Management Review (November): 29-31.
5. Lamb, Robert,
Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall,
1984.
6. Teece, David J.; Pisano, Gary; Shuen, Amy (August 1997).
"Dynamic Capabilities and Strategic Management". Strategic Management
Journal (John Wiley & Sons) 18 (7): 509–533.|doi=10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
No comments:
Post a Comment