For ariannna Rimes

Running head: EXTERNAL ANALYSIS 1

EXTERNAL ANALYSIS

Topic: External Analysis

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Institution

Organizations do not operate in isolation and as such, they are subject to both internal forces and external factors, which influence the decisions made regarding the organizational operations. There is need for the organizations therefore to find a suitable fit between the external and internal forces if they have to realize the progress in their strategic management. In the previous paper, I did an internal analysis of HD motorcycle and presented a report to the managing executives. In this paper, I am analyzing the external forces (PEST) and five porter’s forces and present to the management showing how these forces can be very crucial in decision-making for the company as it faces the emerging competition from other emerging operators such as “victory” and “Indian” (Campbell & Craig, 2005).

PEST is an acronym for political, economic, social and technological analysis, which I believe they are important aspects in the HD motorcycle strategic decision- making because they have huge impact on their operations especially considering that the company is expanding to foreign markets. For instance, political forces are very important for the company in its strategic decision- making in the United States and abroad wherever it would be setting up shop. Political forces influence tax regimes in a given country and as you know, taxes are very important in business operations. Higher taxes will translate into higher prices for customers; a very dangerous trend especially in emerging competition. Therefore, political analysis is important to determine the market, which has better taxes for the organization. Such other political forces are stability, a very important ingredient of business. It would be very hard for a company to operate successfully in a country with political unrests due to the vandalism, which comes with political unrest (Bensoussan & Fleisher, 2008).

Economic forces will be a very important tool in strategic positioning of the company. Currently as I write this analysis report, there are concerns of high prices associated with the HD motorcycle in the market. Economic analysis in this case will be very important for the company because it will help the company to determine the best markets in which to set up shop. In the worsening world economic times, analysis of economic forces, such as taxes, economic growth and exchange rates and interests rates of a given country. This will help the organization to determine the best markets it can set up operations so that it can help the organizations reduce the increasing prices so that they can influence the customer towards the company products (Campbell & Craig, 2005).

Social forces analysis will be very important for the company because again it uses the social based mystique to push their product into the market. Such social forces like purchasing power, cultural aspects and the product safety is very important in ensuring that the company designs the best products for the right market segment. Other issues like product safety of the product to the customer are very important to assure the customer of good quality and safety to their life. A customer needs to know whether when they ride a motorcycle will have their luxury as they wish without worries of breakdowns of even having to hurt themselves (Bensoussan & Fleisher, 2008).

Businesses are now running on technological platforms and this underscores the importance of technology in the operations of HD motorcycle. The company has already invested a lot in technological concerning its logistics and production management. The company therefore needs to do regular technological analysis to determine the emerging technological trends to determine the ones, which can help the company go forward and which are posing threat to HD motorcycle. The obsolete technologies need to be phased out while the emerging ones need to be incorporated in the company production processes to push the company efficiency forward (Campbell & Craig, 2005).

Just as PEST is important to organization regarding analysis of the external forces affecting the organization, the five porter’s forces are very important to HD motorcycle in determining the strategic position of the company. For instance, given that the motorcycle company focuses on offering luxury riding, there is a threat of substitute because customers can still find luxury in other ways such as sunbathing and walking in the park. The organization need to analyze this substitute so that they can understand how to model their products so that they provide the best luxury so that they do not find the need opt for the substitutes (Campbell & Craig, 2005).

There is also the threat of entrance of new players in the market such as “victory” and “Indian, which is threatening to eat into the Company’s market share. Analysis of this five porter’s force will be very crucial for the company to determine the best strategies the Company to adopt so that it can adapt to minimize the impact of the new entrants on their market. Suppliers are also a very important people part of five porter forces because they can influence the quality of the materials supplied to the company. The materials and their prices will in a very great deal determine the kind of products they are going to supply in the market as well as their prices. It is therefore prudent for them to scrutinize their suppliers very well to ensure that they get the best prices as well as the quality (McBee, 2011).

Customers are as well very important force in HD motorcycle because they are the bosses of the business since they can drive the business away from the market by spending their money on competitor products. For the company to make a strategic management decision, it is important therefore they look at such things as the customer tests and preferences to ensure that the company changes with their changing tests. This will help it to ensure it keeps up the customer satisfaction by responding to their needs (McBee, 2011).

External environment analysis and five porter’s forces analysis are very important tools in helping the organizations make a strategic decision about their organizational direction. Such factors like political forces are important considerations because the organization is able to know the market, which is favorable for their operations. An organization also needs to know the best market, which offers it with the right interest rates and exchange rate for the company to compete favorably. The Company for instance, is currently having issues of high prices being attached to their price tag. It also has to fight the threat of entrance of new player in the industry both at home and in the international market. This explains why the company needs both PEST and five porter’s forces analysis to enable it make good strategic management decisions, which will help them keep the competitive edge in the market (McBee, 2011).

References

McBee, R. D. (2011). Harley-Davidson's Future (Abroad). International Journal Of Motorcycle Studies, 7(2), 1-8

Campbell, D. J., & Craig, T. (2005). Organisations and the business environment, Amsterdam: Elsevier Butterworth-Heinemann.

Bensoussan, B. E., & Fleisher, C. S. (2008). Analysis without paralysis: 10 tools to make better strategic decisions, Upper Saddle River, N.J: FT Press