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


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