1.
What is meant by the term “External Analysis”? What is the purpose
of “PESTLE” analysis?
External Analysis:
The environment around us consists of
unlike variables. It is significant to identify the different opportunities and
threats that exist in an environment.
The tool that measures such types of threats and opportunities that
exist within the environment is called external analysis. It is the process the
examining the external environment of an organization which cannot be
controlled by the organization. The company has to deal with either internal or
external factors. An internal factor
comes within the organization.
External analysis generally consists of
two factors :
- Macro
- Meso
Macro factors are the patterns and broad
tends in nation and world beyond the organization. It includes factors such as
demographic factors, government regulations and demographic factors.
Meso factors are more into industry
analysis. It generally includes talks about markets, competitors, substitute
products and markets.
PESTEL stands for Political, Economical,
Social , Technological , Legal and Environment.
Purposes of PESTLE analysis
Ø PESTLE analysis is used
for the purpose of identifying all the external analysis that affects the
business organization.
Ø It is used for forecast
the future impact in the business, which might be helpful in taking
organizational decisions .
Ø Pestle analysis is
useful for to make the best strategic decisions.
Ø Strategists can assess
the identified risk and use their ideas to inform knowledge.for example, as a
result of PESTLE analysis, a new restaurant in Nepal may discover that there is
a high penalty on business that gives alcohols to minors. Hence, the new
restaurant can come with the policy to check identity card of customers who
order alcohol.
Ø It’s a very useful tool
to evaluate the present condition of the business organization.
Ø The PESTEL factors can
be used as an tool to recognize the opportunities and minimizing threats.
Thus PESTEL analysis is a very significant tool to tack with the
external analysis of the business.
2. Read the
article about Big Mart Super Store – what external issues are the Super Markets
would have to consider at this time to have competitive advantage over others?
Big Mart is one of the emerging supermarket stores in the valley,
there are certain external factors that it should consider in this transition
stage to gain upper hand or competitive advantage over its competitors. The
things of concern for the Big Mart will be the economic, social and the
environment factors.
To gain an competitive edge in the market Big Mart store should
consider following external issues such as:
·
Economic outlook
The store
needs to conduct a research or survey to have a knowledge about the economic
background of the people living in the location around the store. Must know
about the living standards of the people. The purchasing power of the people
living around the locality should be considered an option to research.
·
Political and regulatory policies
The political environment of any country directly or indirectly
affects the business in one way or the other. The store should be aware about the political
situation about the country and the rules and regulations set apart by the government.
The country’s political environment should be stable so that the business can
have a positive impact and hence profit and prosper in the long run.
·
Competition from other retailers
The store should be aware about its competitor’s strategies and
decisions it implements. Business should always be ready to lower its price to
compete with its competition . As most stores in the valley they reduce the
price as much as possible to gain a competitive edge . Thus the super market
stores should constantly monitor the activities of its competitors.
·
Level of demand and supply
The product supply of the store must be evaluated according to the
demand of the product in market or on the basis of consumer demand’s. The
demand supply relationship goes hand in hand in any business organization. The
store should manage its stock, inventories which will be costly to them . Thus
to remain in the competition there should be a proper balance between the
demand and supply .
Thus to remain competitive in the market, the super market need to
focus on all the points mentioned above.
3. Discuss your
preparations for the Activity Week field work. Have you arranged to meet your
group? Have you been to the Big Mart before? How are you planning to record
your data?
Every student is
scheduled to meet at City Centre sharp at 9:00 am. Our group consists of four
members and each and every member are really very excited. Every member from
our group has agreed to meet 1 hour before the scheduled time so that we can
have time to discuss and prepare ourselves .Big Mart is located very near our
college so it’s a place which is a short distance for all of us . Our members
have decided to first record all the data in the notebooks and the put it down
in the laptops.
References:
- E.H. Bowman and C.E.
Helfat, ‘Does corporate strategy matter?’, Strategic management Journal,
vol. 22, no.1 (2001), pp.1-14.
- R.P. Rumelt, ‘How much does
industry matter?’ Strategic management Journal’, vol. 12, no. 2
(1991), pp. 167-185
- www.msdn.microsoft.com/en/us/library/aa479076.aspx
[MSDN, Accessed on 15th December, 2012]
