Explain How External Environment Influence Essay

foreign environs aims to help an disposal to obtain opportunities and threats that go away affect the organisations competitory situation. External opportunities are characteristics of the external environment that commence the potential to help the physical composition achieve or exceed its st driftgical goals. External threats are characteristics of the external environment that may prevent the organization from achieving its strategical goals. in that respectfore, organisations must think back over appropriate strategies to take advantage of the opportunities piece of music overcome the threats in order to achieve their strategic goals.The external environment consists of variables that are outside the organization and not typically within the short-run control of top counselling. They may be general forces within the macro instruction or remote environment, which consists of political-legal, economic, socio- pagan, technological forces usually called PEST. Polit ical-legal force casts scheme readiness by dint of government and law intervention. For example, the environment law requires the worlds automobile manufacturers to reduce emission of green house gasses, and therefore these manufacturers nurture to reformulate their product schema.Economic force influences scheme preparation through economic growth, interest order, ex castrate rates and the inflation rate. For example, ex form rates affect the costs of exporting goods and the supply and price of imported goods in an economy, and thus influence strategy formulation of exporters. Socio-cultural force is about the cultural aspects, health consciousness, population growth rate, age distri only ifion, career attitudes and emphasis on safety. Trends in social-cultural factors affect the demand for a alliances products and how that partnership operates.For example, increasing health consciousness shag influence strategy formulation of fast-food companies that may use up to ado pt product innovation strategy. Technological factors accept technological aspects such as RD activity, automation, technology incentives and the rate of technological alternate. For example, rapid development of the information technology has signifi toilettly influenced the strategy formulation of logistics service providers who are now able to provide top-hole express go.There may be specific forces within the micro or near environment, which involves analyzing the threat from the spick-and-span entrant, rivalry among the existing players, twinge from the buyers, pressure from the suppliers and pressure from the substitutes. This is introduced in Porters Five-Forces Model. Profitable markets that profess high returns will attract new theaters which eventually will fall profitability for all levels in the application unless the ledger entry of new firms can be blocked by incumbents. The existing firms therefore engage to formulate new strategies against potential ent rants.For most industries, the intensity of competitive rivalry is the major(ip) determinant of the competitiveness of the industry. For example, high intensity of competitive rivalry in the automobile industry forces competitors such as Ford, Honda, to form strategic alliances or adopts the strategy of MA. The bargaining power of buyers is the ability of customers to put the firm under pressure. For example, strong bargaining power of buyers in the computer industry put Dell under pressure. To deal with such pressure, Dell has to nidus on relationship marketing strategy by offering value-added services to its customers.The bargaining power of suppliers is also described as the market of inputs. Suppliers of lovesome materials, components, labor, and services (such as expertise) to the firm can be a citation of power over the firm, when there are few substitutes. Suppliers may abjure to start with the firm, or charge excessively high prices for unique resources such as Microsof t software and Intel chips which affects the formulation of price strategy of PC makers. The organism of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives.In order to forbear customers, companies must formulate appropriate strategies to compete with the substitutes. For example, take out producers compete with soy milk producers. However, strategy formulation is also influenced by the degree of turbulence of the external environment. A high degree of turbulence exists if changeability is high and predictability is low. Companies need to formulate strategies based on the mean prescriptive coming if turbulence is low, whereas based on the unplanned rising approach if turbulence is high.How organizations overcome environmental changes? Organisations need to deal with environmental changes with appropriate strategies. First, organisations may opt to cargo area and see. much(prenominal) strategy has its advantages and disadvantages. For example, facing a significant technological change, some companies may choose to integrate the new technology into their products. If they are successful, the rest companies wait and see strategy is obviously unwise. However, if they failed, the rest companies wait and see strategy appears wise.As a result, strategic decision making is impacted on and opportunities may either be lost or capitalised on. Second, organisations may choose to change in response to environmental changes through either proactive or unstable. Proactive change involves actively attempting to make alterations to the work federal agency and its practices. Companies that take a proactive approach to change are much trying to avoid a potential future threat or to capitalize on a potential future probability.Reactive change occurs when an organization makes changes in its practices after some threat or opportunity has already occurred in the external environment. As an examp le of the difference, assume that a hotel executive learns about the increase in the number of Malaysians who want to motivity with their pets. The hotel executive pull ins a plan to reserve certain rooms in numerous hotel locations for travelers with pets and to advertise this new amenity, even before travelers begin ask about such accommodations. This would be a proactive response to change because it was made in anticipation of customer demand.However, a unstable approach to change would occur if hotel executives had waited to enact such a change until many hotel managers had received repeated requests from guests to accommodate their pets and were denied rooms. In reality, companies may use a combination of both proactive and reactive approaches. Proactive approach is extremely common when an industry is new with little or no change. The bellwether company entering the industry is making all of the strategic decisions or macrocosm proactive. However, because of its succes s, competitors gradually enter the market, resulting in the turbulent change of the competitive environment.Consequently, the reactive change is on the part of the new competitors as well as the bellwether company. To overcome environmental changes, companies may also choose the unification or accomplishment strategy. A merger is defined as the joining of both or more than organizations to constitute a new combined, legal entity. An scholarship is defined as the purchase of more than 50 percent of the choose shares of one organization by another, but the two organizations are appease separate legal entities with the acquiring organization running as the conjure up company and another as a subsidiary.For example, recent study discloses that the merger and acquisition strategy in the global automobile industry will be further enhanced in the near future in order to deal with the threat of global financial crisis which decreased the consumers spendable income and increased the debt of auto makers and suppliers that hold back to save their organisations through merger and acquisition Ddiscuss the importance of organisational culture in strategy implementationOrganisational culture can be defined as the trunk of shared beliefs and values that return and direct the behaviour of members, can have a strong influence on day-by-day organisational behaviour and performance. (1) Reflection to wind instrumentership Successful strategy implementation needs strategic leadership. Strategic leadership is the ability of influencing others to voluntarily make decisions that enhance prospects for the organisations long-term success eyepatch maintaining short-term financial stability.It includes determining the firms strategic direction, adjust the firms strategy with its culture, modelling and communicating high honorable standards, and initiating, shaping and implementing changes in the firms strategy, when necessary. Strategic leadership sets the firms directio n by developing and communicating a day-dream of future and inspires the organizations members to move in that direction. (2) Enable to create mission & trance The trance is the source and the main idea of a company. The mission aims to give the direction which presents the unique scope of business, its vision nd specific competence & competitive advantages, and to tell employees, consumers, and shareholder what the firm is. For example, IBMs vision is solutions for a small planet. Mission is At IBM, we strive to lead in the invention, development and manufacture of the industrys most ripe information technologies, including computer systems, software, storage systems and microelectronics. Create a shared vision to manage strategic change objectives and vision of both individuals and organization should coincide. There should be no conflict between them.Senior managers need to incessantly and consistently communicate the vision not only to inform but also to overcome resistance through proper communication. Strategy implementers have to convince all those concerned that the change is not superficial. The actions taken have to be credible, highly visible and unmistakably indicative of managements seriousness to new strategic initiatives and associated changes. (3) Help to create a ruin strategy (4) Staff motive Strategy implementation requires special motivation to achieve objectives.The motivation system functions according to the qualities and mechanisms of motivation, which is essential during the stage of entry strategy preparation. First and foremost, this system has to inspire employees involved in the mental process of strategy development and implementation to orient their mindset toward a strategic way of thinking. Formalizing the strategic motivation system includes establishing a system of daily incentives for employees, especially those who are responsible for strategy development and implementation.The formal system is presented in a docum ent, where all suggestions about motivation and incentives are developed and described. It includes all moral, social, and financial instruments of motivation of individual employees and groups of employees. Special recognition and awards should be given to those who go above and beyond in creating and implementing strategic ideas. (5) enlarge or enhance adaptability skills How to use organisation culture to develop competitive advantages 1. Develop CA An organization that is able to maintain a controlling culture is likely to enjoy many benefits.When organization members identify with the culture, the work environment tends to be more enjoyable, which boosts morale. This leads to increased levels of teamwork, sharing of information, and openness to new ideas. The resulting increased interaction among employees activates learning and continuous improvement because information flows more freely throughout the organization. Additionally, such a culture helps to attract and retain to p employees. For example, Wal-Marts founder, Sam Walton, showed concern and respect for his employees from the companys inception.This created an environment of trust that persists to this day. Walton also modeled the behavior that he desired from his employees, especially customer service (both to internal and external customers), by tour his stores, meeting customers, and greeting employees by their first names. Walton also embraced and encouraged change in order to remain competitive, and developed employees by having them work in a variety of positions. Wal-Mart considers its culture the key to its success, and to this day employees continue to think about how Sam would have done it when making decisions. 2.Proactive reactive Todays globally-competitive business environment has made a plus embodied culture a critical aspect of success for firms. No longer just a competitive advantage, it has become a demand for success, allowing companies to attract and retain top employees . Therefore, where the culture is serving to lower morale, it is recommended that management take proactive rather than reactive steps to change the corporate culture using a top-down approach, establishing a new vision and demonstrating new behavior consistent with the revised vision. 2. Ability to change 3. hard learning curve