Upload
duyen-doan
View
229
Download
0
Embed Size (px)
Citation preview
8/12/2019 Unit 03 Business Environment
1/25
NGO QUY NHAM, MBA
BUSINESS ENVIRONMENT
Ng Qu Nhm, MBA
Email: [email protected]
Unit 3:
8/12/2019 Unit 03 Business Environment
2/25
NGO QUY NHAM, MBA
Lecture outline
External environment Types of external environment
Analysing the environment
Managing the environment
8/12/2019 Unit 03 Business Environment
3/25
NGO QUY NHAM, MBA
External environment
External environmentrefers to the outsideforces or institutions that potentially affect anorganisations performance
External environment is made up of:
The General environmentThe broad conditions and trends that may affect theorganisation.
The Specific environment
The part of the environment that is directly relevantto the achievement of an organisations goals.
8/12/2019 Unit 03 Business Environment
4/25
NGO QUY NHAM, MBA
Economic
environment
Socio-cultural
environment
The externalEnvironment
Theorganisation
Suppliers
Competitors
Customers
Pressuregroups
8/12/2019 Unit 03 Business Environment
5/25
NGO QUY NHAM, MBA
The General Environment
The General (Societal) Environment Economic forces
Technological forces
Political-legal forces
Sociocultural forces The Task (Specific) Environment Governments
Suppliers
Competitors Customers
Pressure group
8/12/2019 Unit 03 Business Environment
6/25
NGO QUY NHAM, MBA
Economic Environment
GDP trends
Interest rates
Money supply Inflation rates
Unemployment levels
Wage/price control
Devaluation andrevaluation
Energy available andcost
Disposal income
Currency market
regulate the exchange of materials,money, energy, and information
8/12/2019 Unit 03 Business Environment
7/25NGO QUY NHAM, MBA
Political-Legal Environment
Legal & governmental systems within which anorganisation must function.
Allocate power and provide constraining andprotecting laws and regulation
Antitrust regulations Environmental protection
laws
Tax laws
Special incentives
Foreign trade regulations
Attitudes toward foreigncompanies
Laws on hiring andpromotion
Stability of government
Outsourcing regulation
8/12/2019 Unit 03 Business Environment
8/25NGO QUY NHAM, MBA
Technological environment
refers to the current state of technological
knowledge and know-how (which generateproblem-solving inventions)
Total governmentspending for R&D
Total industry spendingfor R&D
Focus of technologicalefforts
Patent protection
New products
New developments intechnology transfer
from lab to market place Productivity improvements
through automation
Internet availability
Telecommunication
infrastructure
8/12/2019 Unit 03 Business Environment
9/25NGO QUY NHAM, MBA
Socio-cultural environment
Attitudes, values, norms, beliefs, behaviours &associated demographic trends characteristic of agiven geographic area.
Lifestyle changes
Career expectations Consumer activism
Rate of familyformulations
Growth rate of
population Age distribution of
population
Regional shifts in
population Life expectancies
Birthrates
Pension plans
Health care
Level of education
8/12/2019 Unit 03 Business Environment
10/25NGO QUY NHAM, MBA
International environment
International economic integration andglobalisation
How do these factors influence on anorganisations strategies and operation?
Fewer tariffs
Currencies liked via floating exchange rates
More global capital flows
8/12/2019 Unit 03 Business Environment
11/25NGO QUY NHAM, MBA
The Specific environment
Suppliers
Competitors
Government &
regulators
The
employment
marketPublic pressure
groups
The
Organisation
Customers
/clients
8/12/2019 Unit 03 Business Environment
12/25NGO QUY NHAM, MBA
PORTERS FIVE FORCES OF COMPETITION
Bargainingstrengthof
suppliers
Bargainingstrengthof
customers
Existence of
substitutes
Ease of entryinto industry
Intensity ofcompetition
8/12/2019 Unit 03 Business Environment
13/25
NGO QUY NHAM, MBA
Potential Competitors
The greater the barriers to entry, thehigher tends to be above-normal profit
Barriers to entry Brand loyalty (product differentiation)
Cost advantage over new entrants (technology:learning curve)
Economies of Scale (Size)
Large fixed costs associate with marketing,
association, R&D and design Capital requirements
Government policy
8/12/2019 Unit 03 Business Environment
14/25
NGO QUY NHAM, MBA
Competition Among Existing Firms
The extent of competition among establishedfirms depends on:
Competitive structure Fragmented industry: low entry barriers &
commodity-type products price wars
Consolidatedindustrytacit agreement
Rate of industry growth
Amount of fixed costs
Excess capacity Exit barriers (economic, strategic, emotional
factors)
8/12/2019 Unit 03 Business Environment
15/25
NGO QUY NHAM, MBA
The bargaining of customers
Customers are most powerful when:
1. There are many small companies in supplyindustry and few, large buyers
2. The buyers purchase in large quantities
3. The supply industry depend on the buyers for alarge percentage of its total orders
4. Low switching cost between supply companies
5. Buyers can purchase the input from severalcompanies at once
6. Buyers can use the threat to supply their ownneeds through vertical integration
8/12/2019 Unit 03 Business Environment
16/25
NGO QUY NHAM, MBA
The bargaining power of suppliers
Suppliers become most powerful when:
1. The product that suppliers sell has fewsubstitutes and is important to the company
2. The companys industry is not an important
customer to the company3. Suppliers products are differentiated (to suchan extent that its costly to change supplier)
4. Suppliers can use the threat to of vertically
integrate forward into the companys industry5. Buying companies cannot use the threatvertically integrate backward
8/12/2019 Unit 03 Business Environment
17/25
NGO QUY NHAM, MBA
The existence of substitutes
Substitute products are ones ofindustries that serve similar customerneeds
The existence of close substitutes
presents a strong competitive threat
Key: Elasticity of substitution
8/12/2019 Unit 03 Business Environment
18/25
NGO QUY NHAM, MBA
Analysing the environment
Environment characteristics: Environmental Uncertainty
Managers do not have enough information about theenvironment to understand or predict the future.
Uncertainty is determined by the degree of complexity
and change
Environmental ComplexityNumber of elements in an organisations environment andthe degree of an organisations knowledge about itsenvironmental components.
Environmental DynamismRate and predictability of change in the elements of anorganisations environment.
8/12/2019 Unit 03 Business Environment
19/25
NGO QUY NHAM, MBA
Managing the Environment
Degree of changeStable Dynamic
Degreeofcomp
lexity
Sim
ple
Complex
DecentralisedBureaucratic
(Standardised skills)
DecentralisedOrganic
(Mutual adjustment)
DecentralisedBureaucratic
(Standardised skills)
CentralisedOrganic
(Direct supervision)
Four approaches for managing uncertainty:
8/12/2019 Unit 03 Business Environment
20/25
NGO QUY NHAM, MBA
Managing the environment
Three approaches to managing theenvironment:
Adapting to your environmentInvolves changing internal operations & activities to make
the organisation and its environment more compatible. Influencing your environment
Involves trying to alter environmental elements to makethem more compatible with the organisations needs.
Domain shiftingChanging product/service mix to create favourableinterface.
8/12/2019 Unit 03 Business Environment
21/25
NGO QUY NHAM, MBA
Adapting to your environment
BufferingStockpiling either inputs into or outputs from aproduction or service process to cope withenvironmental fluctuations.
Smoothing
Taking actions aimed at reducing the impact offluctuations, given the market.
ForecastingPredicting changing conditions & future eventsthat significantly affect an organisations
business.Rationing
Providing limited access to a product or service inhigh demand.
8/12/2019 Unit 03 Business Environment
22/25
NGO QUY NHAM, MBA
Influencing your environment
Advertising & public relations Boundary spanning
Recruiting
Negotiating contracts Co-opting
Strategic alliances
Trade associations
Political activity
8/12/2019 Unit 03 Business Environment
23/25
NGO QUY NHAM, MBA
Domain shifting
Move out of a current product,service or geographic area into amore favourable domain
Expand current domains throughdiversification or expansion ofproducts/services offered
8/12/2019 Unit 03 Business Environment
24/25
NGO QUY NHAM, MBA
Social Responsibility of Business
Social Responsibility A business firms obligation, beyond that
required by the law and economics, to pursuelong-term goals that are good for society.
To whom should the firm be responsible? Employee relations
Consumer protection
The environment Financial honesty and openness
8/12/2019 Unit 03 Business Environment
25/25
NGO QUY NHAM MBA
Lecture summary
External environment: Types of external environment
General environment; Specific
environment Analysing the environment
Managing the environment
Adaptation, Favourability influence &Domain shift