Strategy: Strategic Management and External Business Environment

Topics: Strategic management, Chocolate, Porter five forces analysis Pages: 7 (1786 words) Published: May 18, 2013
Sustainable Strategy
Management Report 1 – Environmental Audit

Leyi Shen


1. Abstract
2. Introduction
3. External Business Environment
3.1 PESTEL Analysis of chocolate industry
3.2 Porter’s Five Forces
3.3 Industry life cycle analysis
3.4 S.W.O.T analysis (Opportunities and Threats)
4. Internal Business Environment
4.1 Internal capabilities: resources and competences
4.2 S.W.O.T analysis (Strengths and Weaknesses)
5. Conclusion
6. References

1. Abstract
This essay is a case study of analyzing the UK biggest chocolate company Thorntons’ existing strategy in current economic situation using different aspects from both external and internal business environments. In this report I will engage with the business frameworks that we learned in the first five weeks such as S.W.O.T analysis, Porter’s Five Forces, PESTEL analysis as well as Industry life cycle. Moreover the S.W.O.T analysis will be divided to tow parts, which are strength and weakness for internal business environment and opportunities and threads for external business environment. After the full analysis for the existing strategy, we can see whether the strategy is able to face many changes from macro environment or microenvironment in this ever-changing world.

2. Introduction

When a new player wants to have business in a new industry, it would better to make a strategy to direct the right way to success. Strategic planning is upward focused, looking at ensuring how tactics link up to corporate goals and strategies, strategic thinking is downward focused, looking to ensure that meaning and purpose are diffused throughout the organization so that appropriate goals and tactics can be developed to meet the real needs of the organization. (Shelton & Darling, 2001; Whitlock, 2003)

3. External Business Environment
3.1 PESTEL analysis of chocolate industry
As a matter of fact, a full PESTEL analysis can help organizations to protect or handle the unpredictable changes from external environment efficiently in this ever-changing world. * Political factors

Basically, there is just a few political factors will effect the companies which are having business in chocolate industry, because governments do not have to many limitations to the food industry. However, as the largest UK chocolate company, which has been exploring the foreign market outside EU, several uncertainties, has to be faced, such as the taxations in Asia are constantly changing.

* Economic factors
In this difficult economic situation, every organization suffers a heavy blow from financial crisis and Torntons is no exception. Normally, food industry can reflect the inflation most at the first time. Generally speaking, price of food is the first sign to be noticed when the financial crisis happened.

Source: Based on information from 2011

We can easily see that the sales performances of Torntons own stores and franchise decreased during 2010 to 2011. Conversely, the total retail sales had an increase by 8.2% from 2010 to 2011, which means customers did not spend too much money on the regular price goods. However people bought more chocolate when goods were on sale. In other words, the inflation has a serious impact on people’s life and food industry.

* Social Factors
Social factors have an impact on the chocolate industry. First of all, in general, people do not think chocolate is a kind of healthy food at all. However, more and more people are seeking a healthy life style right now. So for these people, they would not take the chocolates into considered. On the other hand, due to increasing competition, Torntons has to face lots of challenges with them.

* Technological Factors
Technology always plays an important role in strategy, because lots of parts of process in organization base on the technology. For a chocolate company how to continuously improve the produce...
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