Ntroduce The Four Main Elements Of The Strategic Management Process.pdf

Explain why environmental analysis is an important activity for the strategy formulation process of an organization... An environmental analysis helps organizations identify internal and

THE STATE BANK OF

VIET NAM

MEMBER

HUỲNH THẾ DANH

NGÔ NHƯ NGỌC

HOÀNG ANH THƯ

MAI NGỌC THÚY AN

PHAN NGỌC UYÊN NHƯ

TRẦN THANH HOÀNG PHƯỚC

LECTURER

PHẠM HƯƠNG DIÊN, Ph.D

1

management process? 1

2 Explain why environmental analysis is an important

organization 3 3

Explain the components of the external environment? 5

4 How does PESTEL analysis aid in the development of the strategy in a company? 7

5 How would you determine the level of competitive intensity in an industry? Take one example 11

MINISTRY OF EDUCATION & TRAINING

BANKING UNIVERSITY OF HO CHI MINH CITY

GROUP ASSIGNMENT

HO CHI MINH CITY

09/2023

1 Introduce the four main elements of the strategic management process?

Four basic elements to create a tactical strategic management plan includes; situational analysis, strategy development, strategy execution, and strategy evaluation

Strategy evaluation is the process of analyzing a strategy to assess how well it's been implemented and executed

A strategy evaluation is an internal analysis tool and should be used as part of a broader

strategic analysis for the organization when making decisions about your strategy

Strategy execution is the implementation of a strategic plan in an effort to reach

organizational goals It comprises the daily structures, systems, and operational goals that set your team up for success Even the best strategic plans can fall flat without the right execution

Situational analysis is the process of collecting, evaluating, and organizing information

regarding an organization's internal and external environments It involves evaluating the business's strengths, weaknesses, opportunities, and threats (SWOT analysis)

Strategy development is the process an organization uses to determine how it will

allocate its resources and get maximum impact from its people to achieve its objectives It's the act a team will conduct to produce a measurable and specific action plan intended

to help the business operate, innovate, and grow

2 Explain why environmental analysis is an important activity for the strategy formulation process of an organization.

An environmental analysis helps organizations identify internal and external elements that can either negatively or positively impact their business Learning about how to conduct an environmental analysis can help you prepare an effective strategy for your business There are several reasons why environmental analysis is important:

Identifying Opportunities and Threats:

Organizations can identify potential opportunities in the market This process helps them stay ahead of the competition and leverage favorable trends Additionally, it enables them

to identify potential threats or challenges that the organization may face to the proactive development of strategies

Understanding Market Dynamics:

Environmental analysis provides customer preferences, buying behaviors, and emerging trends It helps organizations align their strategies with market demands and stay relevant

in a rapidly changing business

Assess The Competitive Landscape

Environmental analysis helps organizations evaluate the competitive landscape by understanding their competitors' strategies, strengths, and weaknesses From there, develop strategies to gain competitive advantage

Enhance Decision Making

This knowledge helps reduce risk when implementing an informed decision-making strategy because strategies can be adjusted to suit market conditions, trends and customer preferences

Improving Resource Allocation

This analysis aids in resource allocation decisions, such as investing in areas that align with the organization's strategic objectives and divesting or improving areas with limited potential or competitive disadvantage

3 Explain the components of the external environment?

What is the External Environment?

An organization's external environment, also known as the business environment, consists of various factors, forces, and elements outside the organization that can significantly impact its operations, strategies, and performance

Those are all factors beyond the reach of the organization, which can affect the operation

of an enterprise

Understanding the components of the external environment is crucial for organizations to adapt, make informed decisions, and remain competitive

Why are external environmental factors important?

External environmental factors are important because they can have direct and indirect effects on an organization's business operations, human resources and revenue The external environment of an organization or a company changes continuously over time, is always innovating and is beyond the control of the company But executives and managers can monitor and supervise these changes and minimize their consequences

Important key elements of an organization's external environment includes:

Natural Environment

Environmental factors, including climate change, natural disasters, resource availability, can impact industries like agriculture, energy and manufacturing Organizations need to consider their environmental impact and sustainability practices

Societal Environment

The societal environment is mankind’s social system that includes general forces that do not directly touch on the short-run activities of the organization, but that can influence its long-term decisions These factors affect multiple industries as follows:

 Economic forces that regulate the exchange of materials, money, energy and information

 Sociocultural forces that regulate the values, mores and customs of society

 Technological forces that generate problem-solving inventions

 Political–legal forces that allocate power, provide constraining, protecting laws and regulations

Economic Environment

This component includes economic factors such as inflation rates, interest rates, exchange rates, economic growth or recession and overall economic stability Changes in these factors can affect an organization's costs, pricing, demand for products or services, and financial health

Technological Environment

Advances in technology have a profound impact on businesses This includes innovations, new technologies, automation, and digitalization Organizations need to adapt to technological changes to stay competitive and efficient

Political and Legal Environment

The political and legal environment includes government policies, regulations, taxation, trade laws, and political stability Changes in these areas can have a significant impact on

an organization's operations, compliance requirements, and market access

Social and Cultural Environment

This component relates to the societal and cultural factors that influence consumer behavior, preferences, values, and lifestyles Understanding these factors helps organizations tailor their products, marketing strategies, and convey information to the target audience Typically demographic which affects the population For example, an increase in population size will likely lead to an increase in demand for goods and services as there are more potential consumers

4 How does PESTEL (STEEP) analysis aid in the development of the strategy

in a company?

What is PESTEL (STEEP) analysis?

PESTEL analysis is a method used to evaluate prices and analyze external factors affecting a business or business environment PESTEL is an acronym for important factors including: Political (Politics), Economic (Economy), Social (Society), Technological (Technology), Environmental (Environmental) and French Law (Law)

PESTEL analysis helps businesses better understand external factors that may affect their business operations This allows a business to assess risks and baselines from the surrounding environment and adjust its business strategy accordingly and to help the business make smart decisions and prepare for the future

The word PESTLE (STEEP) is made up of the initials of the following six macro-environment factors:

Political Factors

The Political developments can highly influence individuals and organizations It is important to be aware of likely upcoming shifts in power Political developments can affect environmental, antitrust, financial markets, trade, and other kinds of laws Factors

to be considered include political stability, regulation of monopolies, tax policies, price regulations consumer protection, jurisdiction and trade unions

Economic Factors

The direct impact on the economy and its performance which involves economic factors strongly affects profitability and the company in general This factor includes growth rates, interest rates, employment rates, foreign exchange rates,…

For instance, if the value of the US dollar increases compared to the Chinese yuan, it means that Chinese buyers will need more yuan to purchase one dollar As a result, this makes US exports like Boeing aircraft and Intel chips more expensive for Chinese buyers, leading to a decrease in demand for US exports in general

Social Factors

Social factors include cultural norms and expectations, health consciousness, population growth rates, age distribution, career attitudes, health, and safety These factors are helpful for companies to better plan their marketing analytics and strategy For example, the Indian market generally witnesses a surge in demands for vehicles during the last months of the year, due to marriage and the festive season

These factors are particularly significant for marketers as they target certain customers Additionally, they also highlight the local workforce and its zeal to operate under certain circumstances

Technological Factors:

Technological factors mean the innovations and developments in technologies These factors impact an organization’s operations Several new developments like Artificial Intelligence, IoT, Machine Learning, Deep Learning, are being made in the technology field and if a company fails to match up the trend it may lose its position in the market

A few of the technological factors which are included in the PESTLE analysis include the rate of technological change, the evolution of infrastructure, and any government or institutional research

Environmental Factors

The environmental analysis looks at the physical environment as well as climate change policies or directives from governmental entities, energy availability or related pricing trends (e.g., scarcity of oil could create rising gas prices), animal-related laws impacting specific product categories, etc

The same example with Social Factors, people in society begin to realize the importance

of the environment To reduce the harm to the environment, most companies switch to developing sustainability, which is good for the environment, society and economy, and produce eco-friendly products/services like electric cars, canvas bags instead of plastic/nylon bags,…

Legal Factors

Every incorporation must understand the law in the country they operate in They also must be aware of any change in legislation and the impact, this may have an effect on their company They must know what is legal and be allowed to adjust conformably their behaviors and activities

Under US law, especially Copyright Laws, YouTube has developed an automated system that scans for copyrighted materials and either blocks them from being uploaded or puts advertisements before playing them to generate revenue for the original creator of the video content

What is PESTEL (STEEP) analysis used for?

By auditing the external environment, a PESTLE analysis can detect and understand broad, long-term trends This can support a range of business planning situations, such as:

Strategic business planning

A PESTLE analysis provides contextual information about the business direction, its brand positioning, growth targets, and risks (such as another pandemic) to productivity It can help determine the validity of existing products and services and define new product development

Human resources strategy:

A PESTEL analysis can find disruptive changes to business models that may affect the future employment strategy It will identify skills gaps, new job roles, job reductions or displacements

Marketing strategy:

Information used for planning marketing strategy is often taken from social factors analysis activities This information may include customer’s attitude changes, changes in lifestyle,… It can help the marketing department create more marketing campaigns and prioritize business activities to accomplish specific marketing objectives within a set timeframe

Product development:

By monitoring external activity, a PESTEL analysis can help inform whether to enter or leave a route to market, determine if a product or service still fulfills a need in the marketplace, or when to launch a new product

People strategies, reports and projects

A PESTLE analysis can be used as a framework to look outside the organization to hypothesize what may happen in future and what should be further explored It can ensure that some basic factors are not overlooked or ignored when aligning people strategies to the broader organization strategy

Companies can use a PESTLE analysis in financial analysis, risk analysis and strategic planning For example, if a company has outsourced its production to a region that may experience inflation, awareness of this economic factor can help the parent company in adjusting its revenue projections Similarly, a business that imports goods from a region that is susceptible to hurricanes can use awareness of the environmental factor to plan for potential supply chain delays

Businesses may also consider pairing the PESTLE analysis with another type of analysis, like the SWOT analysis Conducting these regular assessments can better equip organizations to identify and plan for challenges while generating high profits

5 How would you determine the level of competitive intensity in an industry? Take one example

Porter’s 5 Forces Analysis

To assess the level of competitiveness in an industry, one can employ Michael Porter's Five Forces model which was created by M Porter in 1979 This model aids in the analysis of factors influencing a company's profitability and competitive position within

an industry The Five Competitive Forces include:

Competitive Rivalry: this involves evaluating the competitive rivalry among existing

firms in the industry Factors such as the number of competitors, market concentration, differentiation, and industry growth rates affect rivalry A higher rivalry suggests increased competitive intensity