MNG 3701 MANUAL
1ST SEMESTER 2018
LECTURER: Lynne Addison
UNIT 3
STRATEGIC ANALYSIS: ANALYSING THE
EXTERNAL ENVIRONMENT.
1
,LEARNING UNIT 3
STRATEGIC ANALYSIS: ANALYSING THE EXTERNAL
ENVIRONMENT.
3.1 LEARNING OUTCOMES
Explain the structure and strategic relevance of the external environment.
Identify relevant macro- environmental forces ad assess/forecast the
expected the expected change and potential strategic impact of these
forces
Discuss relevant techniques for analysing the macro-environment
Analyse the tsk or industry environment and identify the impact of
industry forces on competitiveness and profitability
Evaluate the techniques for industry analysis including strategic group
analysis
Analyse the structure, dynamics and attractiveness of industries
Identify an organisation ‘s competitors and predict competitor behaviour
Explain the relevant techniques for analysing uncertainty and risk in the
external environment.
Note macro-environment is termed “broad environment” and industry environment is
called “task environment”
3.3 (8.1 Venter, 2014:138) INTRODUCTION:
Developing trends in technology, nature and society are slowly revolutionising
the business environment on a global and unprecedented scale, much like the
earth’s tectonic are shifting the ground under our feet.
This is called ‘globality’ and is characterised by greater interconnectedness
and interdependence between countries is leading to phenomenal economic
growth, states of hyper-competition, rapid innovation and increased
cooperative strategies.
A growing number of stakeholders such as customers, employees, investors
and other stakeholders are demanding that companies behave “responsibly” in
terms of the natural environment.
As such a new compact between business and society is being advocated
where ‘business as usual’
Historically the business world has only focused on the internal stakeholders
e.g. employees, shareholders, etc)
There are three levels of analysis which will influence the organisation’s
strategic decision (vision and mission) and strategic actions:
(i) Analysis of the board environment (environment trends)
2
, (ii) Analysis of the task environment (key role players, along with the
factors and conditions influencing the industry’s profit potential)
(iii) Analysis of strategic groups and competitors (predicting competitors
’actions, responses and intentions).
From the study guide page 72
The purpose of analysing major trends and events in an organisation’s external
environment is to identify strategically significant opportunities on which
organisations can capitalise, as well as identifying external threats that
organisations face and need to counter.
The analysis and evaluation of the external business environment focuses on
the macroenvironment as well as on the industry environment, and includes
the following.
Explaining the structure, relevance and importance of the external
environment in strategic planning.
Identifying and analysing macroenvironmental forces ad their
implications for strategic planning in organisations
Discussing the relevant techniques for analysing the macroencironment.
Identifying and analysing the forces that impact industry competitiveness
and profitability.
Evaluating techniques for industry analysis including strategic group
analysis.
Analysing industry structure, dynamics and attractiveness.
Identifying an organisation‘s competitors and predicting competitor
behaviour.
Explaining relevant techniques for analysing uncertainty and risk in the
environment.
3.4 (8.2 Venter, 2014:139) STRUCTURE AND STRATEGIC IMPORTANCE OF
THE EXTERNAL ENVIRONMENT.
The text book states that boundaries and interfaces that exist between
organisations and their external environments are relatively fluid and cannot
be clearly defined.
As a result surprises are sprung onto the organisations by the external
environment and managers need to be prepared to react.
Timely and accurate information is required so managers can react and make
strategic decisions.
Unfortunately managers often have little information especially when they are
operating in turbulent or high-velocity industries and find themselves under
conditions of rapid change and uncertainty.
Ideally managers must not only know their current competitive environments
but also their future competitive environments.
8.3 (Venter, 2014:141) ANALYSING THE BROAD ENVIRONMENT.
See figure 8.1 page 141.
3
, While individual firms can influence their task environments , they rarely have
the ability to influence their broader environment (except through radical
technological innovation (e.g Intel or Microsoft)
PESTLE Analysis of South Africa
Oct 31, 2016 | Kiesha Frue | 0 Comments
http://pestleanalysis.com/pestle-analysis-of-south-africa/ (accessed
23/01/2017)
Political factors: corrupt politicians
South Africa is in the midst of local elections. Right now, this
is a good thing. ANC councilors are attempting to remove
corrupt politicians.
But with every election, there are people who want the corrupt
to stay in power. Until all corrupt politicians can be removed,
their current positions can cause inconveniences for new
businesses (depending on the politician’s personal agenda).
Being mixed up in questionable politics puts a damper on those
attempting to build a business and those on the fence about
investing in South African businesses.
(i) Economic factors: rand (currency) is in limbo
The South African currency, Rand, is at an all-time low. The
problem is, while the Reserve Bank has the ability to
influence Rand, it’s staying neutral, except in relation to
interest, where the Reserve Bank will respond with interest
rate spikes as the rand continues to weaken.
Right now, the currency is subjected by the market forces. But
with such low currency and exchange rate, it’s a wonder how
businesses will start or stay in demand with the diminishing
Rand.
4
1ST SEMESTER 2018
LECTURER: Lynne Addison
UNIT 3
STRATEGIC ANALYSIS: ANALYSING THE
EXTERNAL ENVIRONMENT.
1
,LEARNING UNIT 3
STRATEGIC ANALYSIS: ANALYSING THE EXTERNAL
ENVIRONMENT.
3.1 LEARNING OUTCOMES
Explain the structure and strategic relevance of the external environment.
Identify relevant macro- environmental forces ad assess/forecast the
expected the expected change and potential strategic impact of these
forces
Discuss relevant techniques for analysing the macro-environment
Analyse the tsk or industry environment and identify the impact of
industry forces on competitiveness and profitability
Evaluate the techniques for industry analysis including strategic group
analysis
Analyse the structure, dynamics and attractiveness of industries
Identify an organisation ‘s competitors and predict competitor behaviour
Explain the relevant techniques for analysing uncertainty and risk in the
external environment.
Note macro-environment is termed “broad environment” and industry environment is
called “task environment”
3.3 (8.1 Venter, 2014:138) INTRODUCTION:
Developing trends in technology, nature and society are slowly revolutionising
the business environment on a global and unprecedented scale, much like the
earth’s tectonic are shifting the ground under our feet.
This is called ‘globality’ and is characterised by greater interconnectedness
and interdependence between countries is leading to phenomenal economic
growth, states of hyper-competition, rapid innovation and increased
cooperative strategies.
A growing number of stakeholders such as customers, employees, investors
and other stakeholders are demanding that companies behave “responsibly” in
terms of the natural environment.
As such a new compact between business and society is being advocated
where ‘business as usual’
Historically the business world has only focused on the internal stakeholders
e.g. employees, shareholders, etc)
There are three levels of analysis which will influence the organisation’s
strategic decision (vision and mission) and strategic actions:
(i) Analysis of the board environment (environment trends)
2
, (ii) Analysis of the task environment (key role players, along with the
factors and conditions influencing the industry’s profit potential)
(iii) Analysis of strategic groups and competitors (predicting competitors
’actions, responses and intentions).
From the study guide page 72
The purpose of analysing major trends and events in an organisation’s external
environment is to identify strategically significant opportunities on which
organisations can capitalise, as well as identifying external threats that
organisations face and need to counter.
The analysis and evaluation of the external business environment focuses on
the macroenvironment as well as on the industry environment, and includes
the following.
Explaining the structure, relevance and importance of the external
environment in strategic planning.
Identifying and analysing macroenvironmental forces ad their
implications for strategic planning in organisations
Discussing the relevant techniques for analysing the macroencironment.
Identifying and analysing the forces that impact industry competitiveness
and profitability.
Evaluating techniques for industry analysis including strategic group
analysis.
Analysing industry structure, dynamics and attractiveness.
Identifying an organisation‘s competitors and predicting competitor
behaviour.
Explaining relevant techniques for analysing uncertainty and risk in the
environment.
3.4 (8.2 Venter, 2014:139) STRUCTURE AND STRATEGIC IMPORTANCE OF
THE EXTERNAL ENVIRONMENT.
The text book states that boundaries and interfaces that exist between
organisations and their external environments are relatively fluid and cannot
be clearly defined.
As a result surprises are sprung onto the organisations by the external
environment and managers need to be prepared to react.
Timely and accurate information is required so managers can react and make
strategic decisions.
Unfortunately managers often have little information especially when they are
operating in turbulent or high-velocity industries and find themselves under
conditions of rapid change and uncertainty.
Ideally managers must not only know their current competitive environments
but also their future competitive environments.
8.3 (Venter, 2014:141) ANALYSING THE BROAD ENVIRONMENT.
See figure 8.1 page 141.
3
, While individual firms can influence their task environments , they rarely have
the ability to influence their broader environment (except through radical
technological innovation (e.g Intel or Microsoft)
PESTLE Analysis of South Africa
Oct 31, 2016 | Kiesha Frue | 0 Comments
http://pestleanalysis.com/pestle-analysis-of-south-africa/ (accessed
23/01/2017)
Political factors: corrupt politicians
South Africa is in the midst of local elections. Right now, this
is a good thing. ANC councilors are attempting to remove
corrupt politicians.
But with every election, there are people who want the corrupt
to stay in power. Until all corrupt politicians can be removed,
their current positions can cause inconveniences for new
businesses (depending on the politician’s personal agenda).
Being mixed up in questionable politics puts a damper on those
attempting to build a business and those on the fence about
investing in South African businesses.
(i) Economic factors: rand (currency) is in limbo
The South African currency, Rand, is at an all-time low. The
problem is, while the Reserve Bank has the ability to
influence Rand, it’s staying neutral, except in relation to
interest, where the Reserve Bank will respond with interest
rate spikes as the rand continues to weaken.
Right now, the currency is subjected by the market forces. But
with such low currency and exchange rate, it’s a wonder how
businesses will start or stay in demand with the diminishing
Rand.
4
