2️⃣
The external and internal environment
Finished
1.The Macroenvironment
1.1 PESTEL
2.The Competitive environment
2.1 Porter’s 5 forces
2.2 Environmental analysis
3.The Internal environment
3.1 culture and climate
1.The Macroenvironment
⇒ the environment influences a managers’ strategic choices
Strategic management
= Analysis and decisions, necessary to formulate and implement startegy
Strategy
= Plans and actions to accomplish long-term objectives and performance
Why is strategic management important?
→ for performance, to deal with the changing environment
→ to get functions & departments on the same page and to adjust decisions to strategy
1.1 PESTEL
= It’s a framework used to analyze external factors that can impact a business
1. Political
The external and internal environment 1
, Economic policies, International trade policy, outcome of elections,…
e.g. Monetary policy of European Central Bank
2. Economic
Interest rate, inflation rate, labour costs, exchange rates, stock prices,…
3. Social and Socio-demographic
= Composition and changes in population, based on age, gender, origin, profession,…
Population growth, diversity, birth rates, immigration,…
4. Technology
New products, advanced production techniques, new industries, markets or niches,…
e.g. Products: 3D printer
5. Ecology
availability of natural resources, environmental challenges, climate changes,…
6. Legal
Intellectual property rights, tax laws, carbon tax,…
How external environment may shape business decisions and strategy
2.The Competitive environment
2.1 Porter’s 5 forces
⇒ The 5 forces determine an industry’s level of competition, attractiveness & profit potential
1. Rival Firms (Competitors)
⇒ they compete for the same C & seek to gain market share
⇒ they can be big, small, local & global players or players using new channels
How do they compete?
Price strategy, product strategy, advertising, promotion,…
Rivalry can be more intense
The more competitors there are
when industry or market growth is slowing down
⇒ more competition for every remaining C
⇒ industry has overcapacity
The external and internal environment 2
The external and internal environment
Finished
1.The Macroenvironment
1.1 PESTEL
2.The Competitive environment
2.1 Porter’s 5 forces
2.2 Environmental analysis
3.The Internal environment
3.1 culture and climate
1.The Macroenvironment
⇒ the environment influences a managers’ strategic choices
Strategic management
= Analysis and decisions, necessary to formulate and implement startegy
Strategy
= Plans and actions to accomplish long-term objectives and performance
Why is strategic management important?
→ for performance, to deal with the changing environment
→ to get functions & departments on the same page and to adjust decisions to strategy
1.1 PESTEL
= It’s a framework used to analyze external factors that can impact a business
1. Political
The external and internal environment 1
, Economic policies, International trade policy, outcome of elections,…
e.g. Monetary policy of European Central Bank
2. Economic
Interest rate, inflation rate, labour costs, exchange rates, stock prices,…
3. Social and Socio-demographic
= Composition and changes in population, based on age, gender, origin, profession,…
Population growth, diversity, birth rates, immigration,…
4. Technology
New products, advanced production techniques, new industries, markets or niches,…
e.g. Products: 3D printer
5. Ecology
availability of natural resources, environmental challenges, climate changes,…
6. Legal
Intellectual property rights, tax laws, carbon tax,…
How external environment may shape business decisions and strategy
2.The Competitive environment
2.1 Porter’s 5 forces
⇒ The 5 forces determine an industry’s level of competition, attractiveness & profit potential
1. Rival Firms (Competitors)
⇒ they compete for the same C & seek to gain market share
⇒ they can be big, small, local & global players or players using new channels
How do they compete?
Price strategy, product strategy, advertising, promotion,…
Rivalry can be more intense
The more competitors there are
when industry or market growth is slowing down
⇒ more competition for every remaining C
⇒ industry has overcapacity
The external and internal environment 2
