Week 6

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 :

1. Macro
2. 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 15^th December, 2012]