Topic 3

24/09/2013

-week 3-

Chapter 3 learned about evaluate company’s external environment.  External environment also can be known as macro environment.  Macro environment is encompasses the broad environmental context in which a company’s industry is situated that includes strategically relevant components over which the firm has no direct control.  There are 6 strategic factors in the macro-environment, which is political factors, economic conditions, sociocultural forces, technological factors, environmental factors, and legal condition.  These factors can be known as PESTEL analysis.

Political factors include political policies and processes such as tax policy, fiscal policy, tariffs, and federal

banking system.  Economic conditions are the general economic climate and specific factors such as interest rates, exchange rates, inflation rates and so on.  Then, sociocultural forces include societal values, attitudes lifestyles, growth rate and age distribution.  Next, technological factors are pace of technological change and technical developments that have the potential for wide-ranging effects on society such as genetic engineering.  Environmental forces include ecological and environmental forces like weather, climate and associated factors.  Last but not last legal factors are regulations and law with which companies must comply like consumer laws and safety regulation.

Framework for competitor analysis includes a rival’s current strategy, objectives, capabilities and assumption about itself and the industry.  Current strategy use to be succeeding in predicting a competitor’s next move, company strategies need to have a good understanding of each rival’s current strategy.  Objective is an appraisal of a rival’s objective should include not only its company financial performance objective but strategic ones as well.  Assessing a rival’s capabilities involve sizing up not only their strength but their weaknesses also.  Assumptions are using to know how a rival’s top managers think about their strategic situation can have a big impact on how they behave.