With an increasingly competitive and dynamic business world, anyone organizations want to be successful, managers must make and develop appropriate business strategies. Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations. ( Johnson, Scholes, Whittington, 2009:3). It does not happen by itself automatically and depends on people, especially the managers who decide and conduct strategy. This is called “strategic management”. In effect, Strategic management can be divided into three elements, shows in the figure below:
Source: based on G.Johnson, K. Scholes, Exploring Corporate Strategy, 7th edition, financial times. The figure shows that the three components of strategic management in line: first do the strategic analysis, then choose the appropriate strategic choice and putting strategy in action at the end. Thus, strategic analysis is essential first step to the strategic management. It refers to the analyzing the strength of businesses' position and understanding the important forces that may influence that position. According to Johnson&Scholes (2005), strategic analysis is concerned with understanding the relationship between the different forces affecting the organization and its choice of strategies. For the organization, business environment is what gives their survival. In order to understand the complexity in the outside world, organizations have to analyze their external environment. Besides, internal strategic capabilities are also important for organizations. It focuses on unique capabilities for each organization that can be difficult to copy by others. Therefore, there are two main forces affecting an organization: external business environment and internal strategic capability. In this essay, I intend to find out each force in external environment and internal strategic capabilities of organization, and explain how these forces influence its strategy.
1. The external business environment of organization
The external business environment is exactly close connection with both public and private sector organization running. Whatever the nature of their business, organizations do not and cannot exist separate from the external big wide world (Capon, 2000). So it is obvious that the performance of external business environment will influence organization effectively. Layers of the external business environment will be divided into three departments: the macro-environment, industry or sector, and competitors and markets. Next, I will introduce these layers in detail, starting with the macro-environment. 1.1 The macro-environment
The macro- environment refers to major external factors that influence an organization's decision making, and affect its performance and strategies, but that are outside of the company's control. It always can be analyzed using PESTEL framework. The PESTEL framework provides a comprehensive list of influences on the possible success or failure of particular strategies (Johnson, Scholes, Whittington, 2009:25). It examining Political, Economic, Social, Technological, Environmental and Legal categories into which external influences on the organization can be placed. 2.11 Political
The political external environment includes local and national government, local associations, trade unions and employers’ bodies. In a word, it emphasis the role of government. These authorities control organizations by making business or trade rules and regulations. There is an example to show how national political environment affecting organizational activity: the 1995 Disability Discrimination act made it illegal for organizations not to provide access for disabled workers or customers on their permission. The decision caused many organizations to commission...