Strategic Management Lecture 2 Environmental Analysis

PESTEL ANALYSIS: EG P[blank_start]olitical[blank_end]: Shell oil have a strong relationship with N[blank_start]igerian[blank_end] government EG E[blank_start]conomic[blank_end]: impact on machine t[blank_start]ool[blank_end] industry EG Socio-[blank_start]cultural[blank_end]- Levi S[blank_start]trauss[blank_end] struggled to attract younger generation despite being a huge market player EG L[blank_start]egal[blank_end]-Alcohol adverts can't be se[blank_start]xual[blank_end] or linked with cou[blank_start]rage[blank_end]

Porter's five forces (19[blank_start]79[blank_end]) as a rule, the stronger the five forces, the lower combined pr[blank_start]ofitability[blank_end] of participants -Threat of new entry (product dif[blank_start]ferentiation[blank_end]) -threat of su[blank_start]bstitute[blank_end] products (threat of ob[blank_start]solesce[blank_end]) -power of buyers (threaten backward vertical integration into raw materials) -power of suppliers (threaten forward int[blank_start]egration[blank_end] into retail) -threat of rivalry (slow industry growth)

Porters five forces (1979) CRITIQUE: bi[blank_start]as[blank_end] of economics over politics, less effective in un[blank_start]stable[blank_end] industries, static framework, no account of c[blank_start]ooperation[blank_end]

Critique against Porter's 5 forces: [blank_start]Ramel[blank_end]t, R (1991) believes that even though industry can impact the business, it is mostly down to the in[blank_start]dividua[blank_end]l organisations. Flaws in the industry are down to 'random dist[blank_start]ribution[blank_end] of especially high and low performing businesses across in[blank_start]dustries[blank_end]'

Branden[blank_start]burg[blank_end] and Nal[blank_start]ebuff[blank_end]'s Value Net (1996) looks at cooperation which Porter ignores. use g[blank_start]ame[blank_end] theory to show dynamic industries, once you have the 5 segments sorted then identify all the elements in the game. PARTS of the game: P[blank_start]layers[blank_end] (construct relationships) Added v[blank_start]alues[blank_end] (measure what everyone brings to the game) R[blank_start]ules[blank_end] (structure of the way the game is being played) Ta[blank_start]ctics[blank_end] (devices to shape players' perception) Sc[blank_start]ope[blank_end] (limits and links of the game)

EG Value-net: [blank_start]Inte[blank_end]l invested into the application 'Pro[blank_start]Share[blank_end]' in the mid-nineties which allowed people to hold video conferences online. Using the value net they found comp[blank_start]limentary[blank_end] companies like telephone companies could sell faster connections to their shared customers and su[blank_start]bsidised[blank_end] the cost for Proshare.

Scenario P[blank_start]lanning[blank_end] (B[blank_start]ur[blank_end]t, G) 2006 not predictions or extrapolation but a description of current events and their proj[blank_start]ection[blank_end] into the future, it is a SOCIAL R[blank_start]EASONING[blank_end] PROCESS EG [blank_start]Apple[blank_end] has been known to use this to keep their op[blank_start]tions[blank_end] open for the future and ob[blank_start]ses[blank_end]s over competitors actions to stay in the lead

COMBINING PESTEL AND SCENARIO PLANNING both recognise level of un[blank_start]certainty[blank_end], take into account multiple per[blank_start]spective[blank_end]s, considers range of plausible futures, implications for strategy