Strategic analysis 2: Environment - macro level DSGM (Lecture 2.1) Dr Elvira Bolat C113, Christchurch House, Talbot campus ebolat@bournemouth.ac.uk @Elvira_Mlady
This week: Outline Lecture 2.1: Strategic Analysis 2: Macro-environmental analysis – Understand the various approaches used to analyse the external market environment – Understand the importance and application of PESTEL in determining key factors impacting on marketing strategy
Lecture 2.2: Strategic Analysis 2: Micro-environmental analysis – Understand the use of Porter’s five forces analysis to define attractiveness of industries and sectors for investment – Understand how to disaggregate an industry into a range of competing companies using the concept of Strategic Groups – Understand relevance of industry lifecycle – Understand the importance of market segments in marketing strategy
Summary for the week Next week’s seminar preparation
Strategic Marketing scope Includes understanding the strategic position of a organisation, making strategic choices for the future, and managing strategy in action. In practice this means you: - Audit - Make decisions - Implement & control ‘3 stages’ 3
Audit / Strategic position The strategic position is concerned with the impact on strategy of the external environment, the organisation’s strategic capability (resources and competences), the organisation’s goals and the organisation’s culture.
WHERE ARE WE NOW….SO WHAT
Layers of the environment
External market - macro environment
The external market – macro environment A number of broad and largely uncontrollable forces that effect the company. These factors generally affect, but in different ways, every single organisation in the marketing environment
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Need to understand the nature of change
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Need to understand the marketing impact of changes in the general business environment
Environmental scanning
Environmental Audit Environmental analysis
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PESTEL Framework
Social change People make up markets. The size of a market is of prime concern. We need to know about a market: o population size and trends, o age profiles, birth and death rates o education levels o changes in culture o changes in consumption patterns, lifestyle choices
Consumer market:
What do they have in common?
Clothing
Sports Equipment
Electronic Devices
Power Tools
Bicycles
Household Items
http://www.nielsen.com/content/corporate/apac/en/press-room/2014/global-consumers-embrace-the-share-economy.html
Global Consumer • Online share communities facilitate preference for access over ownership • “Owners in a share economy become both consumer and producer.” • Highest amongst Millennials, followed by Generation X and Baby Boomers … • Trust is foundation to RELATIONSHIPs! http://www.nielsen.com/content/corporate/apac/en/press-room/2014/global-consumers-embrace-the-share-economy.html
http://www.campaignlive.co.uk/article/co-creation-why-brands-collaborate-survive/1433516
Economic change • Factors which affect consumer/business purchasing power • Power and spending patterns: i.e. economic performance by country, continent, global,
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Technological change New technology creates new markets and opportunities (Netflix, Uber). It also makes markets and companies obsolete (Kodak, Blockbuster) Important!: • pace of change • costs of R&D • extent of regulation
Categories of technology: • •
• • •
New manufacturing technologies Information technologies – Blockchain – Data processing – Internet – Mobile technologies – Digital TV – IoT – AI – VR/AR Transport technologies Biotechnology Nanotechnology ….
New Media mode: Digital marketing trifecta
Political change Politics and the economy are closely linked. We need to be aware of: o o o o o
Legislation Public expenditure Taxation Competition policies Ethics, social responsibility.
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http://www.campaignlive.co.uk/article/top-10-brands-favoured-remainers-brexiters/1403991#F6BrmY5xMIg2q3kg.99
Environmental change Concerned with natural resources. These could be: o o o o
raw material supplies cost of energy pollution levels eco-concerns.
Legal change We need to be aware of: • Competition law and government policy • Employment and safety law • Product safety issues
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Applying PESTEL • Apply selectively –identify specific factors which impact on the industry, market and organisation in question. • Identify factors which are important currently but also consider which will become more important in the next few years. • Use data to support the points and analyse trends using up to date information • Identify opportunities and threats – the main point of the exercise!
PESTEL: Impact mapping SOURCE
DESCRIPTION IMPLICATION
CERTAINTY 1-5 IMPACT 1-5
POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL ENVIRONMENTAL
Source: West et al 2015
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Think through some of the key macro factors that may impact on the beverage industry: - What are they? - What impact? - Prioritise! 26
Review: Importance of macro factors • Affects organisational performance • Constantly changes – creates uncertainty that affects strategic decision making • Contains key factors that need to be isolated and focused on • Impacts on marketing thinking and activity within an organisation • Identifies Opportunities and Threats 27