strama

• PESTEL analysis


  A tool to analyze the external environment of an organization
• PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal factors
• PESTEL analysis


  • Examines the macro environmental factors that can impact an organization, but the organization cannot directly influence them
  • Provides a comprehensive view of the general environment in which an organization operates
• Porter's Five Forces is used to analyze the task environment
• Political factors


  Government interventions, policies, stability, corruption, trade policies, tax policies
• Economic factors


  Economic growth, exchange rates, inflation, interest rates, disposable income, unemployment
• Social factors


  Demographics, cultural norms, values, attitudes, lifestyle trends
• Technological factors


  Technological innovations, regulations, automation, R&D, technological change
• Environmental factors


  Raw material scarcity, pollution, carbon footprint, climate change, sustainability
• Legal factors


  Laws, regulations, discrimination, antitrust, employment, consumer protection, copyright, patents, health and safety
• Applying PESTEL analysis


  1. Identify key factors most relevant to the business

  2. Assign weightings to the factors based on importance

  3. Grade each factor for each country/market option

  4. Calculate weighted average score for each option

  5. Compare the options to determine the most attractive market
• There are many online resources that provide quantified data for PESTEL factors by country
• Porter's five forces


  A strategy framework that analyzes the competitive environment of an industry
• In 1979, Michael Porter published an article called "How competitive forces shape strategy"
• Porter's five forces


  Five basic forces that together shape the industry structure and determine the competitive intensity of an industry
• Porter's five forces


  • It is an external analysis framework that examines the task environment, unlike the macro environment (PESTEL)
  • It evaluates the root causes of profitability in an industry by drawing a connection between competition and profitability
• The five forces


  • Rivalry among existing competitors
  • Threat of new entrants
  • Threat of substitute products or services
  • Bargaining power of suppliers
  • Bargaining power of buyers
• Rivalry among existing competitors

  How intense the current competition is in the marketplace, determined by factors like number and size of competitors, industry growth rate, product differentiation, and exit barriers
• High rivalry among existing competitors

  Competitors actively engage in advertising and price wars, hurting profit margins
• Threat of new entrants

  The seriousness of the threat depends on the barriers to entry in the industry, such as economies of scale, customer loyalty, capital requirements, government policies, and access to distribution channels
• High threat of new entrants

  Existing players may need to increase investments in product development or marketing, or lower prices to deter new competitors, both of which decrease profit margins
• Threat of substitute products


  Substitute products that fulfill the same underlying customer need, even if they are not identical, can lure customers away
• High threat of substitutes

  Companies may need to lower prices, increase advertising, or invest in product upgrades to stay attractive, all of which decrease profit margins
• Bargaining power of suppliers

  The power and control suppliers have to raise prices or reduce quality, which lowers industry profitability
• High bargaining power of suppliers

  Suppliers can charge higher prices or provide lower quality, decreasing profit margins for the industry
• Bargaining power of buyers


  The ability of customers to demand better quality, drive up costs, or exert control over prices
• High bargaining power of buyers

  Customers can force companies to lower prices or provide more features, decreasing profit margins
• Understanding the five forces allows companies to develop strategic actions to shape the competitive environment and protect profitability
• Strategic management


  The process of planning, monitoring, analysis and assessment of all necessities that an organization needs to meet its aims and objectives
• Strategic management process


  1. Goal setting

  2. Gathering information and analyzing

  3. Strategy forming

  4. Implement the strategy

  5. Monitoring
• Goal setting


  • Fixing short-term goals as a direct blueprint in accomplishing long-term objectives
  • Separating roles and duties to people and team management
  • Providing every member of the enterprise with a mission that motivates them in the long run
• Gathering information and analyzing

  • Collecting data from within the organization and the market to develop a constructive plan
  • Recognizing internal avoidances that have been affecting the operations of the organization
• Strategy forming


  • Using the data and information collected to form a unique strategy that satisfies all the necessities and requirements based on the resources available
  • Identifying the capability of your resources
• Implement the strategy


  • Employees involved in this process should have a clear idea of the plan and organizational goals to be implemented with perfection
• Monitoring


  • Analyzing, managing, tracking and evaluating every step that is associated with the strategic management plan
  • Comparing the desired outcomes with the current outcome
  • Doing certain adjustments and new planning if required
• SWOT analysis


  • Inspecting internal factors (strengths and weaknesses) and external factors (opportunities and threats)
  • Helping leaders decide whether the organization's resources and abilities will be useful in the competitive environment and to improve the strategies to remain successful
• Balanced scorecard


  • Breaking down the performance evaluation method into four areas: learning and growth, business processes, customer perspectives and financial data
  • Generating timely reporting mechanisms that show all statistics associated with the growth of the company