EVALUATING A COMPANY’S EXTERNAL ENVIRONMENT

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For this chapter 3 it have correlates with chapter 4.. This chapter learned about the strategically about firm's external environment, and in chapter 4 will learn about the internal environment.

There is a core concept that call macro-environment.

The major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces.

Specific examples of macro environment influences include competitors changes in interest rates, changes in cultural tastes, disastrous weather, or government regulations.

another concept that use is PESTEL concept.

PESTEL analysis are focuses on the six principle components of strategic significance that related to macro-environment.

1. Political factors

2. Economics condition (local to worldwide)

3. Sociocultural forces

4. Technological factors

5. Environmental factors (the natural environment)

6. Legal/regulatory conditions

There 5 competitive forces

This is the factors that influence the competitive position of a company in an industry or market.

: competition from rival sellers

: competition from potential new entrants

: competition from producers of substitute products

: supplier bargaining power

: customer bargaining power

there are a few steps how to using the 5 forces model of competition

1: Identify the different party involved, and the specific factor that brings about competitive pressures

2: Evaluate how strong the pressures (strong, moderate, or weak)

3: Determine whether the strength is conducive to earn profit in the industry.

Last but not least is about Key success factors (KSFs)

KSFs are the strategy elements, product and service attributes, operational approaches resources and competitive capabilities that are essential to surviving and thriving in the industry.

A company's strategy is increasingly effective the more you provide from the competitive pressures and have strong position of firm in industry.