Organisations and the Competitive Environment Quiz

Organisations and the Competitive Environment

• The topic covers the main forces that affect organisational performance, PEST analysis, Porter's five forces model, and stakeholder analysis.

Environmental Forces

• Environmental forces exist at different levels: general (macro), competitive, internal, and stakeholders.
• Each level has a distinct impact on organisational performance.

General (Macro) Environment

• Political-legal factors: employment law, taxation policy, company law, and environmental legislation.
• Economic factors: interest and inflation rates, consumer confidence, and economic growth prospects.
• Socio-cultural factors: demographics, values in society, and changing lifestyles.
• Technological factors: new product potential, alternative means of providing services, and new discoveries.

Competitive Environment

• Buyers/customers: purchasing power and loyalty.
• Suppliers: bargaining power and reliability.
• Competitors: rivalry and market share.
• Substitute goods or services: alternatives and switching costs.

Why is Environmental Analysis Important?

• Environmental analysis is crucial for identifying opportunities and threats.
• Data sources should be both internal and external.
• Frequency of analysis is typically every three to five years.
• Forecasting and scenario planning involve analysis of past trends, demographic characteristics, and assumptions.

Stakeholder Analysis

• Stakeholders are internal and external individuals or groups with interests in the organisation.
• Interests may conflict, and some stakeholders have more influence than others.
• Stakeholder expectations should be managed, with priority given to those with more influence.

Examples of Stakeholder Expectations

• Shareholders: growth in dividend payments, growth in share price, and growth in net asset value.
• Suppliers: timely payment, adequate liquidity, and integrity of directors.
• Government: adhering to laws, paying taxes, and environmental sustainability.
• Customers: competitive pricing, product quality, and return and replacement policies.
• Employees: good compensation, job security, and opportunities for personal development.
• Lenders: liquidity, potential to repay interest and capital on due date.

External Stakeholder Power

• Formal power: exercised by stakeholders who are members of influential bodies or committees.
• Resource power: large manufacturers may dictate product quality and prices.
• Expert power: stakeholders with superior knowledge of customers can dictate terms.

Stakeholder Mapping

• The Power/Interest Matrix is used to categorise stakeholders based on their level of power and interest.
• Stakeholders are grouped into four categories: minimal effort, keep informed, keep satisfied, and key players.

Porter's Five Forces Analysis

• The analysis considers forces in the immediate competitive environment.
• The five forces determine the state of competition in an industry: threat of new entrants, bargaining power of suppliers, intensity of current rivalry, bargaining power of buyers, and threat of substitute products.
• The collective strength of the five forces determines industry profitability.

The Five Forces of Industry Competition

• Threat of new entrants: high entry barriers or low entry barriers.
• Bargaining power of suppliers: weak suppliers or strong suppliers.
• Bargaining power of buyers: weak buyers or strong buyers.
• Threat of substitute products: few possible substitutes or many possible substitutes.
• Competitive rivalry: little rivalry or intense rivalry.

Organising Environmental Analysis

• Responsibility: who will undertake the analysis?
• Data sources: internal and external sources.
• Frequency of analysis: typically every three to five years.
• Forecasting and scenario planning: based on analysis of past trends, demographic characteristics, and assumptions.