BML340/MSCES02:
The Macro-Environment
Aims The aims of this session are to: — Evaluate the impact of the external environment on approaches to strategic green marketing — Distinguish between, describe and evaluate the features of the PESTLE (political, economic, socio-cultural, technological, legal and environmental) environment
The External Environment [Source: Grant, 1995, p. 56]
The External Environment Activity 1: • Why monitor the external environment?
The Marketing Environment Why monitor the environment? Identify market trends Identify new opportunities
To shape your strategy Long-term plans
To minimise risk Informed decisions
• Competitive Advantage • USPs • Market Differentiation • Stories and Narratives • Marketing Mix • Technology
The External Environment [Source: Grant, 1995, p. 61]
The External Environment
[Source: Poon, 1994, p.22]
The External Environment Activity 2: • Use the PESTLE framework to examine factors within the external environment
Political Environment [Source: Tribe, 1999, p. 199]
Political Environment Key Features of the Political Environment 혰 Party Politics 혰 Government policy agenda (tourism, agriculture, sustainability,
regeneration etc) 혰 National and regional devolution 혰 Privatisation
Political Environment Local Authorities Recycling Strategies Waste Collection
Political Environment
Political Environment
Political Environment
Political Environment
Economic Environment
[Source: Tribe, 1999, p. 174]
Economic Environment
Government Economic Policy Fiscal Policy: changes in the level of taxation or
government spending to influence the economy Monetary Policy: changes in interest rates, and thus the cost of borrowing to influence the economy
Economic Environment Economic Environment and Demand Credit crunch and recession Consumer expenditure Real disposable income Interest rates Expectations [health of economy/recession] The savings ratio Direct and indirect taxation [VAT]
Export Demand Exchange rates Monitoring international economic demand
Economic Environment Investment Consumers’ expenditure Expectations Interest rates
Government Expenditure Levels of public spending
Economic Environment Interest Rates Relative increases in the cost of borrowing
Exchange Rates Changes in the exchange rate can have an impact on production
costs Fall in the exchange rate would increase foreign hotel costs for tour operators
Economic Environment — Economics of the Circular Economy [www.ellenmacarthurfoundation.org]
Socio-Cultural Environment Key Features of the Socio-Cultural Environment •
Population Growth
•
Culture and Attitudes
•
Age Structure
•
•
Family structures
Increasingly culturally fragmented
•
Leisure Time
•
•
Income Distribution
Change in demand and expectations
•
Environmentalism
•
•
Consumerism
Attitudes towards workers and working in tourism and hospitality
•
Lifestyles
•
Values and beliefs
•
Increasingly affluent
•
Equal opportunities
•
Highly mobile
Socio-Cultural Environment
Socio-Cultural Environment
The ‘Grey’ pound 30+% of UK population 40% of adult population High disposable income
Socio-Cultural Environment The Branded Customer Experience
The branded customer experience
Profitable growth Branded experience Predictable experience Random experience • Inconsistent • Unintentional
• Consistent • Intentional
• Consistent • Intentional • Not differentiated • Not valuable
[Source: VisitBritain,2003]
• Differentiated • Valuable
• The goal
Socio-Cultural Environment
Confusion over what can and cannot be recycled
Socio-Cultural Environment
Socio-Cultural Environment
Technological Environment Key Features of the Technological Environment • • • • •
IT development Communications development Software development Mobile technologies R&D spending
• • • •
R&D spending Production technology Customer access and use of the Internet Customer perceptions and attitudes to the Internet
Technological Environment Key Features of the Technological Environment
[Source: Poon, 1994, p. 93]
Technological Environment
Technological Environment
Technological Environment
Technological Environment
Legislative Environment Key Features of the Legal Environment • • • • •
Disability Discrimination Act Health and Safety Fire Certification Equal Opportunities Minimum Wage
• • • •
Working Time Directive Insurance Food Hygiene Waste Management
Legislative Environment
Environmental Environment Key Features of the Environmental Environment • • • • •
Weather/climate Global warming Energy efficiency - emission targets Planning control and development [e.g. EIA] Pollution control
• • • •
Perceptions to risk and disaster Sustainability Environmentalism Health issues
Environmental Environment
Environmental Environment ‘Green’ consumers Ethical Trading/Purchasing Animal welfare Health concerns Personal ethics
Environmental Environment 혰 Carbon footprint 혰 Local produce 혰 Circular economy 혰 Fairtrade
The External Environment Activity 3: • What other factors influence the external environment?
Additional Influences
• • • •
The media New production practices New management practices New framework conditions for tourism
Production Practices
[Source: Poon, 1994, p. 95]
Additional Influences
Competitor Profiling • Overview • Objectives • Resources • Record of performance • Current products and services • Competitive strategy • Benchmarking
The External Environment Activity 4: • What is the challenge of understanding the external environment?
Environmental Impact Analysis
혰 Clarity - availability & reliability of information 혰 Impact - seriousness if it happens 혰 Probability - Likelihood of it happening 혰 Urgency - scheduling, prioritisation [Source: Brennan et al 2008]
Calculating Seriousness
Calculating ‘seriousness’ 1.
Use tools such as PEST and 5 Forces to develop a list of potentially important environmental factors
2.
For each environmental factor, estimate the likelihood that it will occur on a scale using 1 (unlikely) to 5 (very likely)
3.
For each environmental factor, estimate the impact on the organisation from 1 (relatively minor impact) to 5 (a fundamental effect on the future of the organisation)
4.
Estimate the urgency of each environmental factor in terms of how soon a management decision needs to be made using a scale from 1 (distant horizon) to 5 (incorporate within the current planning cycle)
5.
For each environmental factor estimate its overall seriousness by summing the scores for likelihood, impact and urgency. This will be on a score between 3 and 15 [Source: Brennan et al 2008]
Environmental Priorities
Seriousness Seriousness 12-15 Develop detailed action plans
7-11 Develop outline action plans
3-6
Evaluate, decide whether to respond or ignore
Closely monitor & actively research
Monitor using passive search Monitor and if no change consider dropping
[Adapted from Brennan, Baines & Garneau]
Clarity
Assessment 1
Assignment 1: Macro-environmental audit (30%) – 1000 words You are required to identify and critique the importance of 4 factors that you believe are key influences on the business sector you have chosen. Marking Criteria Over 70% Exceptional application of a recognised framework
60 – 69% Strong application of a recognised framework
50 – 59% Good application of a recognised framework
40 – 49% Weak application of a recognised framework
Less than 40% Little, if any, application of a recognised framework
Excellent critical analysis of the chosen factors, showing an in depth understanding of the industry
Strong critical analysis of the chosen factors, showing clear understanding of the industry
Some critical analysis of the chosen factors, with a few weak areas in how they relate to the industry
An attempt at critical analysis of the chosen factors, but with many weak areas
Little, if any, critical analysis of the chosen factors, with superficiality in terms of understanding.
A well informed choice of relevant factors, citing a variety of sources
An informed choice of relevant factors, citing a variety of sources
An attempt at justification for the choice of factors, citing some sources. The submission may be weak in relevance of the factors
An attempt at justification for the choice of factors, but citing few sources. The submission will be weak in relevance of the factors
Little attempt at justification for the choice of factors. The factors will have little relevance to the industry.
An excellent bibliography showing a range and depth of research, consistently referenced in Harvard format
A strong bibliography showing a range and depth of research, consistently referenced in Harvard format
A good bibliography showing evidence of research, mainly referenced in Harvard format
A weak bibliography showing little evidence of research, inconsistently referenced in Harvard format
A very limited bibliography lacking range and depth of research, with major inconsistencies in Harvard format
Learning Outcomes: At the end of this session you should be able to: § Evaluate the impact of the external environment on approaches to
strategic green marketing § Distinguish between, describe and evaluate the features of the
PESTLE (political, economic, socio-cultural, technological, legal and environmental) environment § Identify key areas of ‘influence’ within the external environment
that may pose potential opportunities, challenges and risks for your business