BML340 - INTRODUCTION

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