Environmental factor is one of the most important elements that affect heavily on the development of enterprises or industries. At the same time, strategies of production and management are also significant. Therefore, it is necessary for companies to analyze those factors and put forward appropriate strategies for further development. There are many practical analytical models for corporate to apply to. This passage mainly explains how CRH, an international building materials company, deals with environmental factors relating to the industry and achieves its goals with corporate level strategies. After studying the cases given, two main models have been referred to in the passage and some suggestions will be given in the last part.
2. Review of chosen models
There are two main elements for the development of enterprises in a particular industry, that is, the proper usage of external environmental factors and the suitable internal structures and management strategies. (Brockett & Rezaee, 2012) Hence, the two models chosen for CRH are Environmental analysis and Competitive strategies. The two models combine with each other properly, creating the successful situation of CRH in building material industry.
PESTEL is one of the most useful models to analyze the environmental factors for companies in almost every industry. It also called as Environment analysis in professional areas. As a tool of searching and evaluating external factors, PESTEL is a model to have a clear look at the macro environment as well as all the forces which can influence the groups and the industry. (Haque, 2011) Six main factors are included in the model, including political factors, economic factors, social factors, technology factors, environment factors and legal factors. The reason why having chosen this PESTEL model are complex but obvious at the same time. On the one hand, CRH develops in the macro environment in the society and every factor in the model would heavily influence it. On the other hand, PESTEL is a useful model of analyzing CRH’s external environment since it has a general look at almost all possible elements. Thus, recognize all the forces affecting the company. However, the disadvantage of PESTEL is also evident. As a model to analyze macro environment for companies, it is difficult for managers to know all details of those factors just through the model itself. As a result, PESTEL can not function well only by itself and should be combined with other models. (Yuksel, 2012)
Put forward by Michael E. Porter in 1980, Porter’s Generic Strategies is one of the most famous management strategies for companies. Porter thought that there are five forces which affect the processes of competition and three competitive strategies can be chosen for managers in companies in different industries. (Eldring, 2009) The five competitive forces will help managers to be informed of the relevant factors to the industry and the company, which leading to proper strategies and management inside the enterprise. Based on the five competitive forces Porter suggested, he also established a new analysis model of competition in the industry structure, which includes five powerful factors, such as potential entrants, the competitors, alternative products, the purchasers and suppliers. The reason to choose Porter’s Generic Strategies is because it pays much attention to dealing with problems as well as finding out problems. However, there are also some disadvantages. The assumptions Porter put forward can not be identical with reality all the time and the five competitive forces are too simplify to be thorough in logic to some degree. (Pretorius, 2009)
3. Analysis of chosen models with their application
Only when being used by operators in actual management can those analysis models be vitality, both to the company and the professors. Therefore, it will be worth doing research via practical cases with applications of analysis...
Please join StudyMode to read the full document