Workshop 3 - External factors
- Created by: josie001
- Created on: 06-07-22 09:17
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- Workshop 3 - External Influences
- PESTLE analysis
- A framework to analyse the key external factors influencing an organisation
- Should be repeated regularly to identify changes in the environment
- Organisations that successfully monitor and respond to changes in the environment are able to differentiate from the competition and create a competitive advantage
- Political - Political stability, corruption, foreign trade policy, tax policy, funding grants, how political policies affect an industry
- Economic - Economic growth, interest rates, inflation, disposable income of consumers, labour costs, directly impacts profits
- Social - population growth, age distribution, cultural barriers, consumer trends, workforce trends, helps understand customer's needs and wants
- Technological - emerging technologies, maturing technologies, copyright and patents, production and distribution, research and investment, focus on logistics and manufacturing as well as digital technology
- Legal - regulation, employment laws, consumer protection laws, tax policies, anti-trust laws, the impact of laws on a business
- Environmental - climate change, environmental policies, availability of inputs, corporate social responsibility, becoming more significant
- SWOT analysis
- Strengths - Internal, positive attributes of your company that are within your control, assets within your team e.g. knowledge, education, skills, reputation
- Weaknesses - What you could do to improve the organisation, what should you avoid (think brand name, reputation, resource etc.), what factors could lose you sales
- Opportunities - Market growth, upcoming buying trends, regulation changes
- Threats - Everything that poses a risk to the company or its growth, external factors you can't control
- Common tool used by businesses when future planning
- Market forces
- Competitive pressures in a free market that impact prices and output levels
- Primary market forces - supply and demand
- 5 other forces known as Porter's 5 forces
- Threat of new entrants - The less time and money involved in entering a market can weaken companies in that market
- Bargaining power of suppliers - By having a smaller number of suppliers, company's have to rely on them more
- Bargaining power of customers - Customers can drive prices down by being a small number and being hard to find replacements
- Competitive rivalry - This is the competitors ability to undercut a company by offering similar products for less money
- Threat of substitutes - Companies that produce goods with no close substitutes have more leverage over price, when substitutes are available a company's product can be weakened
- Global and International marketing
- Global marketing is important for products with universal demand e.g. food and vehicles
- Most companies are focused on the domestic market, which is the largest economy in the world
- Organisations
- Every organisation has a purpose
- Vision - A clear 'photograph' of an organisation's future, what you are trying to achieve
- Mission statement - A statement as to why an organisation exists and what it's goal is
- Strategic plan - A plan to achieve business goals
- Action plan - puts a strategy plan, vision and SWOT analysis into action
- Values - The basis that business behaviours have
- PESTLE analysis
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