One Strategic Analysis

PART ONE STRATEGIC ANALYSIS

Managers face difficulties in trying to understand the environment. First is the environment that encapsulates many different influences; the difficulty is making sense of this diversity in a way which can contribute to strategic decision making. The second difficulty is that of uncertainty, managers typically claim that the pace of technological change and the speed of global communications mean more and faster change now than ever before.

1.Analysing the environment

1.1 Auditing Environmental Influence------PEST Analysis

As a starting point, it is useful to consider what environmental influences have been particularly important in the past, and the extent to which there are changes occurring which may make any of these more or less significant in the future for the organization and its competitors.

PEST Analysis involves identifying the political, economic, social and technological influences on an organization. It is increasingly useful to relate such influences to growing trends towards globalizations-of possible futures, to consider the extent to which strategies might need to change.

1) Political/legal

- Monopolies legislation

- Environmental protection laws

- Taxation policy

- Foreign trade regulations

- Employment law

- Government stability

2) Economic factors

- Business cycles

- GNP trends

- Interest rates

- Money supply

- Inflation

- Unemployment

- Disposable income

- Energy availability and cost

3) Socio cultural factors

- Population demographics

- Income distribution

- Social mobility

- Lifestyle changes

- Attitudes to work and leisure

- Consumerism

- Levels of education

4) Technological

- Government spending on research

- Government and industry focus on technological effort

- New discoveries/development

- Speed of technology transfer

- Rates of obsolescence

1.2 The Competitive Environment-------Five Force Model

The next step in environmental analysis is moves the focus towards an explicit consideration of the immediate environment of the organization-for example, the competitive arena in which the organization operates.

Five-force analysis provides a means of identifying the forces which determine the nature of the competitive environment, especially in terms of:

1) Barriers to entry.

2) The power of buyers.

3) The power of suppliers.

4) The threat of substitutes.

5) Other reasons for the extent of competitive intensity.

1.3 Identifying The OrganizationÐ'ÐŽÐ'Їs Competitive Position---------Strategic Group Analysis

STRATEGIC GROUP ANALYSIS

The next major step in environmental analysis is analysis the organizationÐ'ÐŽÐ'Їs competitive position that is how it stands in relation to other organizations competing for the same resources, or customers, as it.

One problem in analyzing competition is that the idea of the Ð'ÐŽÐ'oindustryÐ'ÐŽÐ'± is not always helpful because its boundaries can be unclear and are not likely to provide a sufficiently precise delineation of competition.

Strategic group analysis aims to identify organizations with similar strategic characteristics, following similar strategies or competing on similar bases. such groups can usually be identified using two, or perhaps three, sets of key characteristics such as extent of product(or services)diversity, extent of geographical coverage, number of market segments served ect. Which of these characteristics are especially relevant in terms of a given organization or industry needs to be understood in terms of the history and development of that industry, the identification of the forces at work in the environment, the strategies of the organization being considered and so on, the aim is to establish which characteristics most differentiate on group of organizations from another.

2. Resources, competences and strategic capability.

ANALYSING COMPETENCES AND CORE COMPETENCES

In the first part of my portfolio I underlined the importance of analyzing and understanding the external environment in which an organization is operating. This environment creates both opportunities for and threats to the organizationÐ'ÐŽÐ'Їs strategic development. But successful strategies are also depend on the organization having the strategic capability to perform at the level which is required for success. In this part of my portfolio I am going to explain and analyze one of the three main factors that related to the strategic capability-----the COMPETENCE with which the activities of the organization are undertaken.

The difference in performance of different organizations in the same Ð'ÐŽÐ'oindustryÐ'ÐŽÐ'± is rarely fully explainable by differences in their resource base per se. Superior performance will also be determined by the way in which resources are deployed to create competences in the organizationÐ'ÐŽÐ'Їs separate activities, and the processes of linking these activities together to sustain excellent performance. Although the organization will need to achieve a threshold level pf competence in all of its activities, only some will be core competences. These are the competences which underpin the organizationÐ'ÐŽÐ'Їs