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IBPS

Justin F. Keogan

Justin F. Keogan

IBPS – Lecture V Analysis of the Environment

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IBPS

• 4th largest aircraft manufacturer in the world – Boeing, Airbus and Bombardier – Smaller aircraft (110, regional) • Largest exporter

• History of government support (since 1960s) – direct financial support (privatised in 1994) – subsidised loans of foreign airline puchases – Proex scheme (900 aircraft) • Main competitor – Bombardier (Canada) – WTO dispute – ruling seen to have significant implications for strategy of both companies

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IBPS

Analysing the environment - basics
Learning outcomes

Issues it has had to confront – 9/11 – global travel and aircraft orders (October 2011 US$1 billion in options cancelled) – Iraq war 2003 (US$10 billion in airlines losses) – fall off in orders – 2005-2008 – recovery in travel sector – 2008 – the proverbial hit the fan! • Major airlines sufferd declines in customer numbers – cut costs and cancel orders • Brazilian Real – lost a 1/3 of value in August 2008 • Feb 209 – laid off 4,000 of 21,000 employees

1. 2. 3. 4. 5. 6. 7. 8.

Outline the main environmental influences on the organisation and relate the degree of change to prescriptive and emergent strategic approaches; Undertake a PESTEL analysis; Understand the implications of market growth and market cyclicality for corporate strategy; Understand the importance of key factors for success in the environment; Carry out a Five Forces analysis of the specific influences on the organisation; Develop a Four Links analysis of the organisation’s co-operators; Undertake a competitor profile and identify the competitor’s advantages; Explore the relationship between the organisation and its customers.

– Competition is increasing – firms in Russia and China specialising in medium sized craft – Bombardier – new fuel efficient plane for 2013 (110-130 passangers)

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IBPS

Analysing the strategic environment

Options Environment

Purpose

Options

Choice

Implement

Resources Options

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IBPS

Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Czech Republic, East Timor (Timor-Leste), Eritrea, Estonia, Georgia, Germany (unification of East and West), Kazakhstan, Kosovo, Kyrgyzstan, Latvia, Lithuania, Macedonia, Marshall Islands, Micronesia, Moldova, Montenegro, Namibia (independent from South Africa), Palau, Russia (CIS), Serbia, Slovakia, Slovenia, South Sudan, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Yemen (unification of North and South Yemen)

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LEVELS OF ENVIRONMENT LEVELS OF ENVIRONMENT

3 reasons for analysing the environment
Competitors

Macro (PESTEL factors)

Industry (meso – buyers,
suppliers, competitors, middlemen, shareholders, etc.)

Firm Level
(micro – resources and capabilities)

Opportunities and threats

Linkages, existing and potential new ones

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IBPS

Approaches to analysing environment
• Look at range of factors influencing the organisation • Highlight the key factors in each case • Analysis must be meaningful and manageable

Difficulties in studying the environment
• Deciding the purpose of the analysis • The uncertainty of the topic/environment • The range of environmental influences that exist

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IBPS

Results from environmental analysis can be used to provide either a proactive strategy outcome or a reactive strategic situation.

TOOLS FOR ANALYSIS
Macro environment – PESTEL
• Priority matrix

– Porter’s Diamond Industry environment – Porter’s Five Forces Model – Strategic Group Analysis / Competitor profile analysis – Customer analysis – Four Links Model – Stakeholder Analysis

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IBPS

REMEMBER, ONLY TOOLS......
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