Managing a changing environment

In my this lecture I learned how to consider the macro-environment through the framework of PESTEL influences to establish the environment context. Even how to position the firms environment through Poster’s five forces.

The environment context consist of both macro as well as micro environment. Macro-environment that’s the external of the firm is of economic, social, political, legal, technological and international. These factors should not be seen as independent factors. Factors such as technological advances may probably affect the social and economic conditions in different markets.

And micro-environment the internal of the firm are the suppliers, distributors  customers and competitors.

PESTEL FRAMEWORK

The PESTEL framework is designed to provide managers with an analytical tool to identify different macro-environment factors that may affect business strategies, and to assess how different environment factors may influence business performance now and in the future.

Political factors

         Stability of government,  Social policies, Trade regulations,

          Tax policies, Entry mode regulations

Economic factors

         Disposable income of buyers,   Credit accessibility,  Unemployment rates

         Interest rates, Inflation

Social Factors

        Population demographics,

         Distribution of Wealth,Changes in lifestyles and trends, Educational levels

Technological factors

      New innovations and discoveries,  Pace of technological innovations and advances,  Pace of       technological obsolescence,  New technological platforms .

Environmental factors
   Environmental protection laws

          Waste disposal laws, Energy consumption regulation, Popular attitude towards the environment

Legal factors     Employment regulations,Competitive regulations, Health and safety regulations, Product regulations

The key for business managers is therefor to discover the main  drivers of change that may affect business strategies and to discover the factors most likely to influence the performance of the business.
In conducting a PESTEL analysis, business managers may create strategies that take several macro-environment factors into consideration, so that the strategy formulation process will be as sensitive to current and future environment factors as possible.

PORTER’S 5 FORCES:

Assessing the Balance of Power in a Business Situation

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.
With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.
Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations.