The Six Macroenvironmental Forces The following is a detailed analysis of the seven macroenvironmental forces touched upon above. Macroeconomic Forces Macroeconomic forces affect the general economic well-being of the nation or the region in which an industry operates. The rate of growth for the economy. Economic expansions cause a general rise in aggregate consumer demand while recessions cause a general drop in aggregate consumer demand.
We combine these five forces with another element identified by author Tony Grundy in his book, Breakthrough Strategies for Growth: Delivering Sustainable Corporate Expansion. Together with our seventh and eighth tool, you will have the integrated elements you need to guide your organization in developing strong and stable sustainability strategies.
His five competitive forces are as follows: Industry Environmental scanning porters five forces applies both in the for-profit and non-profit sectors.
It refers to the perceptions, expectations and assumptions about the competitive environment, the level of financial returns and the factors critical for success in an industry.
Industry mindset is, on one level, easy to discern by reading trade press and going to conferences. For example, the industry mindset in the computer industry is that people expect the speed of personal computers to double every 18 months. This leads many people to replace computers every two years, or more often.
In the computer industry, there is a competitive mindset that if your organization is not gaining market share, it will die. This mindset clearly sets the stage for the goal of every computer technology organization to increase its market share.
Now, improvements in the automobile industry are such that replacement within two years because of poor craftsmanship or design is rare, and car owners are holding on to their cars for much longer periods of time.
In addition, with the improvement of automobile manufacturing, the industry and customer mindset pertaining to used cars and long-term leased cars has changed in a positive direction quite dramatically.
These questions allow you to develop a set of futuristic pictures and planned behaviors designed to achieve certain objectives. Diagrams, flow charts, computer simulation, computerized mapping and the old pencil and paper can be used in scenario planning, and can help your organization plan for differing versions of the expected future.
Scenario planning sets out several different comprehensive pictures of the future relevant to your organization and its strategic plan. It looks at the future like a video, taking one frame or time period individually, with each one building on the results of the previous.
A story line moves the scenario through each time period. Scenarios are greatly affected over time by key transitional events that are envisioned by the planner that combine to create a predicted future pattern of events.
Since key transitional events are difficult to predict with any certainty, often an organization will construct three scenarios of the future optimistic, neutral and pessimistic and then assess their probabilities. The value of scenario planning is that it allows organizations to create strategic plans consistent with each of the potential scenarios.
It also allows them to leverage some value out of their view or views of the future. Scenarios have, in the past, been the result of brainstorming sessions. They usually involve one or two small teams working in parallel fashion. The process is intricate, but not necessarily difficult since everyone has some view of how the future will look, based on their own form of scenario planning.
In order for scenarios to benefit businesses, the scenario builders must take into account the interrelationships of many unpredictable factors.
These include technology, government policies, personal attitudes, economic and political trends, and lifestyle changes. Computer technology could enable you to include inputs from large numbers of people from your organization to contribute to the scenarios that are developed about the future.
Jack Nicklaus said that he had never hit a golf shot without first visualizing exactly how and where he wanted the ball to go. Visualization in business has been prompted by computer graphics and some argue that visual modes of thinking are now becoming more and more popular due to the influence of television and computers.
Analyzing the Porter competitive forces along with the industry mindset and the scenario planning and visualization techniques, you and your organization can plan strong, successful sustainability strategies. He is also the President of the Sustainable Business Group, a consulting firm to businesses, He is an adjunct professor of strategic management at the Global Energy Management Program of the University of Colorado Denver.
He is the lead author of Breakthrough, Inc.: He has authored over articles and over 80 videos on business strategy, entrepreneurship, leadership, and improving organizations. He can be reached at herb sbizgroup. The website for the Sustainable Business Group is www.
You can learn more about Mr. This entry was posted in Uncategorized.The work I complete for you is guaranteed to be % original, plagiarism Read more about External environmental scan/five forces analysis Identify the most important (5–7) strategic issues facing the organization or business unit.[ ].
The Five Competitive Forces of Industry will influence prices, costs and investment (Porter, ). The feasibility and potential profitability of a hotel can be determined by answering the following questions. Environmental scanning usually refers just to the macro environment, but it can also include industry, competitor analysis, marketing research (consumer analysis), new product development (product innovations) or the company's internal environment.
porter's five forces is a model used to explore the competitive environment in which a product or company operates. Michael Porters 5 forces.
Macroenvironmental forces are changes in the broader economic, political/legal, social, technological, demographic, and global forces beyond the industry being examined.
Any one of these six forces can change or effect any one of an industry’s five internal competitive forces. • Although Porter mentions only five forces, a sixth - other stakeholder - is added here to reflect the power that government, local communities, and other groups from the task environment wield over industry activities.