Strategic Management Essays, The quality of your answer is much more important than its quantity. You do not need to use in-text citation, nor reference in answering the questions.
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L2Themacroenvironmentvt.pdf
Opening story: What seems to account Tesla s success?
Tesla, Inc. (formerly Tesla Motors) is an American automaker, energy storage company, and solar panel manufacturer based in California.
In February 2017, Consumer Reports named Tesla as the top American car brand and ranked it 8th among global carmakers.
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Elon Musk Unveils Tesla Model Y Plan in Shanghai
Elon Musk shows off bizarre dance moves at Tesla event in China
https://www.youtube.com/watch?v=U0sJJU3Fa OQ
Elon Musk Unveils Tesla Model Y Plan at Shanghai Gigafator (3 06 )
https://www.youtube.com/watch?v=34DgYNkR paA
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Tesla s share price from Jan 2015 ($190.41) to Feb 2020 ($774.38)
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Can pigs fly?
E en a pig can fl in it is put at the centre of
hirl ind LEI Jun, CEO of Xiaomi (A Chinese smart phone manufacturer)
Sei ing the right opportunities (in the en ironment)
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Learning Objectives
After studying this module, you should be able to
Understand the concept of environment and how it impacts on businesses Analyse the broad macro-environment
of organisations using the PESTEL framework
Analytical process and report structure
Understand the key drivers of changes in the macro environment
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Competition is very much like a race. How can you win this race?
E ternal en ironment pla s an escalator effect in the race. Internal environment (strategic capability)
pla s a fit effect in the race.
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External environment or factors: Macro and industry environment
Internal factors or environment
Two broad sets of factors primarily determine an organisational performance: internal and external environment
Organisational performance
Production Marketing
Human Resources
R&D The firm
Logistics Services
Info system
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What is the environment of an organisation?
Environment refers to those aspects outside the organisation that affect the business strategy of an organisation (Hubbard, 2017)
The environment can be broken into two levels for analytical convenience
Macro-environment (those aspects outside the industry) Outer layer
Industry environment (those factors within the industry which affect both its profitability and the competitive position of organisations within it).
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Why is the environment important to organisations?
The changes in the environment generate opportunities and threats The opportunities and threats present challenges to which organisations must respond in order to survive and/or prospect. Organizations need to
Scan its environment, monitor it, and collect competitive intelligence. Predict how environment will be changed and understand its implications.
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Why conducting external environment analysis?
Understand how these environmental changes can affect performance of the industries and our organization
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Changes in the environment
Opportunities and/or threats
Strategic implications
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The purpose of the macro-environment analysis
To understand how the environmental factors affect the growth of the particular industry and the performance of the organisation being analysed, particularly in the future through identifying key opportunities and threats in the environment and evaluating their impacts.
The level of analysis is on the environmental factors surrounding the industry, that is, factors (opportunities and threats) that are common to all firms in the industry.
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Macro-environment analysis The PESTEL framework
The PESTEL framework categorises environmental influences into six main types:
political, economic, social,
technological ecological (green) legal
These factors are external to an industry, usually be ond a firm s control
Thus PESTEL provides a comprehensive list of influences on the possible success or failure of particular strategies.
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PESTEL Factors (or
issues) Opportunitie s or threats
Impact of the future
industry growth
Key driver of change
Political
Economic
Social and cultural Technological
Ecological
Legal
3. Overall conclusion
Key trends and events in the macro environment (1/3)
Political Government policy Brexit Government stability Immigration policy Terrorism Tax reform Foreign trade regulations (such as TPP)
Economic Interest rates Unemployment Consumer price index (inflation) Trends in GDP Trade deficit Exchange rate
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How does the macro-environment affect the growth rate of the Australian early child learning (childcare) industry?
Political environment Australian government has increased its
subsidiary (rebate) to the childcare. New policy to encourage mothers to return to their
workforce after they give birth to their child Income tax cut leads to more disposable income
for family
Economic The Reserve Bank of Australia has cut the
interest to 1%; Ho e er, the household s debt is er high currently.
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Hoe does political factors influence the Australian aged care industry?
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Key trends and events in the macro environment (2/3)
Social Aging population Baby boomers start turning 65 Postponement of family formation Greater concern for fitness and environment e-generation Greater disparities in income levels
Technological Artificial intelligent (AI) Internet of Things (IoTs) 5G technology 3D printing New discovery and development (e.g., digital, genetic and nanotechnology)
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The impact of aging population on our society
This aging population is unprecedented, and its implication will be felt through Australian society in what job we do, what services we need, what houses will suit, what transport will be needed and at what cost -- Australian Financial Review
We will also have to ask who get the pension and who will fund it Social and economic changes: 200 years that changed the world
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How social factors affect the aged care industry?
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Key trends and events in the macro environment (3/3)
Ecological (green) Climate change (global
warming) Environmental protection
regulations, Energy consumption Waste disposal and re-
cycling Renewable energy
An inconvenient truth (2006) An inconvenient sequel (2017)
Legal Competition laws Health and safety laws Employment laws Licensing laws IPR laws. Privacy law
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How legal factors affect the Australian aged care industry?
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Key drivers of change
These are those environmental factors that are likely to have a high impact on the success or failure of strategy.
For example: The birth rate is a key driver for those planning nursery education provision in the public sector; Technology for IT industry; Sociocultural changes for the fast food industry.
Typically key drivers vary by industry or sector.
These drivers need to be monitored closely
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Using the PESTEL framework
Apply selectively identify specific factors which impact on the industry, market and organisation in question. In other words, these macro-env factors are Industry –specific!!!
Identify factors which are important currently but also consider which will become more important in the next few years.
Identify inter-connection among the elements
Identify opportunities and threats by single factor and combined one - the main point of the exercise!
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Macro-environment analysis -- A brief summary
Understanding the purpose of this analysis Industry growth rate in the future
Be clear about the level (unit) of the analysis The entire industry as a whole (a strategic group)
Using the analytical framework PESTEL To use for identifying key drivers and issues and
their opportunities or threats To analyse the implications to the industry growth
Predicting the industry growth in the future Drawing your conclusions
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Module 2 summary (1/2)
Environmental influences can be thought of as layers around an organisation, with the outer layer making up the macro-environment, the middle layer making up the industry or sector and the inner layer strategic groups and market segments.
The macro-environment can be analysed in terms of the PESTEL factors, from which key drivers of change can be identified. Alternative scenarios about the future can be constructed according to how the key drivers develop.
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Module 2 summary (2/2)
Key drivers of change: These are those environmental factors that are likely to have a high impact on the success or failure of strategy.
The most important reason for environmental analysis is to identify OPPORTUNITIES AND THREATS and predict their impact on the industry growth
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Preparation for next lecture
Read Chapter 3 in the textbook
Read: Case study: The Australian Department Store
Industry
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