BUSI0009 Business Strategy
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Transcript of BUSI0009 Business Strategy
BUSI0009 Business Strategy
Lecture 7
External Strategic Position 1
22 May 2008
2
Outline of this lecture:
External Environment PESTEL SWOT (OT)
Part One
The External Environment
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The External Environment
The external environment is an essential element of business strategy analysis because of the dependencies organisations have upon their markets and because of the way in which unexpected changes can result in businesses struggling to cope
(Lynch, 2006)
Johnson, Scholes and Whittington, Exhibit 2.1
Layers of the business environment
Part Two
PESTLE
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PESTLE (1)
The Political Environment The Economic Environment The Social Environment The Technological Environment The Legal Environment The Environmental issues
P-E-S-T-L-Ealso called STEP, PEST, PESTEL, STEPPLE,
LoNGPEST
PESTLE (2)
Johnson Scholes and Whittington, 2006 Exhibit 2.2
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Political Considerations
Government stability Type of government
DemocracyAuthoritarian regime
Taxation policy Welfare policy Foreign trade regulations Social welfare policies
Adapted from Johnson, Scholes and Whittington, 2006
Economic Considerations
GDP/ GNP International trade levels
and tariffs National competitive
advantage Money supply Interest rates Disposable incomes Welfare entitlements Unemployment
Inflation Recession/ Depression Exchange rates Interest rates on lending
and borrowing State of stock markets Tax rates Savings incentives Economic Systems
Free market economies Command economies Mixed market economies
Adapted from Johnson, Scholes and Whittington, 2006
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Socio-Cultural Considerations
Adapted from Johnson, Scholes and Whittington, 2006
Population demographicsGender, age, ethnicity, race, religion, working
age population Income distribution Social mobility and stratification Lifestyle changes Attitudes to work and leisure Consumerism Levels of education and training Social Change and Changing Social Attitude
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Technological Considerations
Adapted from Johnson, Scholes and Whittington, 2006
• Government spending on research• Government and industry focus on
technological effort• New discoveries /developments• Speed of technology transfer• Rates of obsolescence• Levels of research and development• Subsidies for research and development
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Legal Considerations
Adapted from Johnson, Scholes and Whittington, 2006
• Competition law• Employment law• Health and safety• Product safety• Environmental protection laws• Business ownership laws• Company law• Disclosure laws• Planning and property law
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Environmental Considerations
Adapted from Johnson, Scholes and Whittington, 2006
• Waste disposal• Energy consumption• Impact of fossil fuels• Raw material resource depletion• Air and soil contamination• Protection of the environment
– conservationrecyclingalternative forms of energy
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Key Aspects of PESTLE Analysis
Not just a list of influences Need to understand key drivers of change Drivers of change have differential impact on
industries, markets, and organisations Focus is on future impact of environmental
factors Combined effect of some of the factors likely to
be most important
Adapted from Johnson, Scholes and Whittington, 2006
Part Three
SWOT
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SWOT
Strengths Weaknesses Opportunities Threats
Internal
External
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Identifying Opportunities
What external trends are there that could be helpful to the organisation? Changes in technology and markets on both a
broad and narrow scale Changes in government policy related to your field Changes in social patterns, population profiles,
lifestyle changes, etc. Local Events
Opportunities usually relate to the organisation’s strengths.
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Identifying Threats:
What external trends are there that could be harmful to the organisation?Obstacles faced? Actions of competitors? Industry or market change? Technology changes?