Chapter 4- Macro Environment

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  • Created on: 23-01-21 10:20
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      • MACRO
        • External factors that effect the overall environment that the business operates in.
      • INDUSTRY
        • Consists of external factors affecting the competitiveness of the industry
      • INTERNAL
        • Consists of the organisation'sown internal resources and capabilities
    • PESTEL
      • Analyses the macro environment as part of strategic planning to identify opportunities and threats
      • Political
      • Economic
      • Social
      • Technological
      • Environmental
      • Legal
      • Once the key factors that affect the industry have been idenitified, scenario planning can be used to consider future responses
        • Concerns the development of pictures of potential futures for the purpose of managerial learning and the development of strategic responses
        • Can be used to explain why some nations have a competitive advantage in certain industries
      • Demand Conditions
        • Demanding local consumers force firms to be more innovative
        • Trend setting customers help local producers to anticipate future global trends
      • Related and supporting industry
        • Proximity of related and supporting industries leads to:
          • Easy access to components, with reduced lead times and carriage costs
          • Encourages knowledge sharing which increases innovation
      • Factor Conditions
        • The availability of the factors of production
          • E.g. human resources, physical resources, knowledge, capital and infratructure
      • Strategy, structure and rivalry
        • Two possible advantages:
          • Strong domestic rivalry forces local firms to become more efficient to survive.
          • Strategies or structures that have become prevalent in a particular nation may give advantages in particular industries


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