pesteldg zara

Lecture 5
External Environment

Parts of these slides are material developed and copyrighted by Johnson, Scholes & Whittington (2006) and Lynch (2006)

Sustainable Competitive Advantage
• One of the main purposes of analysing competitors is to explore where and how sustainable competitive advantage (SCA) can be generated
• Public service and not-for-profit organisations may also wish to explore
SCA as they may be in competition for finance from external bodies
• SCA will probably require elements of both emergent and prescriptive strategy approaches to strategy development

The Competitive Advantage Process
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Competitive advantage should continuously challenge an organisation to improve itself
Competitive advantage should be constantly evolving (dynamic and not static)
Process of development should be built around current strengths and exploit new areas
Long-term success is achieved by creating a continuous flow of competitive advantages
A balance between structure and chaos is essential Explore new ideas, but also exploit existing competences Layers of the External Environment

Understanding the Environment
• Diversity
– Many different influences
• Complexity
– Interconnected influences
• Speed of change
– Particularly IT

Macro-External Environment (1)

Macro-External Environment (2)
Political
• Government stability
• Taxation policy
• Foreign trade regulations
• Social welfare policies
Economic
• Business cycles
• GNP trends
• Interest rates
• Money supply
• Inflation
• Unemployment
• Disposable income

Macro-External Environment (3)
Sociocultural
• Social mobility
• Lifestyle changes
• Attitudes to work and leisure
• Consumerism
Technological
• Government spending on research
• Government and industry focus on technological effort • New discoveries /developments
• Speed of technology transfer
• Rates of obsolescence

Macro-External Environment (4)
Environmental