Podcast
Questions and Answers
Organisations do not need to focus on building connections and legitimacy.
Organisations do not need to focus on building connections and legitimacy.
False
Lobbying and public relations are identified as key nonmarket strategies.
Lobbying and public relations are identified as key nonmarket strategies.
True
The state is often a minor economic player in many countries.
The state is often a minor economic player in many countries.
False
Exposure to civil society is an important variable for identifying political factors.
Exposure to civil society is an important variable for identifying political factors.
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The food industry is not influenced by civil society-based political pressures.
The food industry is not influenced by civil society-based political pressures.
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Canals are often state-owned and currently face significant political pressures.
Canals are often state-owned and currently face significant political pressures.
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Political risk analysis includes both macro and micro dimensions.
Political risk analysis includes both macro and micro dimensions.
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Specialist organisations do not publish ratings of countries' macro political risks.
Specialist organisations do not publish ratings of countries' macro political risks.
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The Paris region accounts for 25% of car concentration.
The Paris region accounts for 25% of car concentration.
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Organisational fields include only competitors and their customers.
Organisational fields include only competitors and their customers.
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Wealth distribution changes can affect the size of luxury goods markets.
Wealth distribution changes can affect the size of luxury goods markets.
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Sociograms are tools used to visualize social connections within an organisational field.
Sociograms are tools used to visualize social connections within an organisational field.
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Increased network density leads to poorer communication of ideas.
Increased network density leads to poorer communication of ideas.
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A community of organisations that frequently interact is described as an organisational field.
A community of organisations that frequently interact is described as an organisational field.
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Powerful firms and respected venture capitalists are important connections for a new hi-technology enterprise.
Powerful firms and respected venture capitalists are important connections for a new hi-technology enterprise.
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Existing ethical attitudes in the financial services industry have remained unchanged for the past 20 years.
Existing ethical attitudes in the financial services industry have remained unchanged for the past 20 years.
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A fall in oil prices can negatively impact countries if it is linked to internal political games in one country.
A fall in oil prices can negatively impact countries if it is linked to internal political games in one country.
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Economic growth rates do not often experience cycles of rise and fall.
Economic growth rates do not often experience cycles of rise and fall.
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Discretionary spending refers to purchases that cannot be postponed.
Discretionary spending refers to purchases that cannot be postponed.
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Industries with high fixed costs are less susceptible to economic downturns due to their pricing strategies.
Industries with high fixed costs are less susceptible to economic downturns due to their pricing strategies.
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Demographics play a role in shaping the innovativeness and effectiveness of organizations.
Demographics play a role in shaping the innovativeness and effectiveness of organizations.
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Geographic factors have no impact on market demands and supply.
Geographic factors have no impact on market demands and supply.
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Managers should evaluate their strategic decisions based on the current economic cycle.
Managers should evaluate their strategic decisions based on the current economic cycle.
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Pressure from local campaigning groups does not affect national politics.
Pressure from local campaigning groups does not affect national politics.
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Hubs in a network can be considered powerful because they connect many network members and facilitate interconnection.
Hubs in a network can be considered powerful because they connect many network members and facilitate interconnection.
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Broker positions limit innovativeness by preventing the exchange of information between separate groups.
Broker positions limit innovativeness by preventing the exchange of information between separate groups.
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A Small World network is characterized by many members being closely connected to each other.
A Small World network is characterized by many members being closely connected to each other.
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Outsider organizations find it easy to penetrate Small World networks without the help of insiders.
Outsider organizations find it easy to penetrate Small World networks without the help of insiders.
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Innovative activity can be measured using indicators like Research & Development budgets and patenting activity.
Innovative activity can be measured using indicators like Research & Development budgets and patenting activity.
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The impact of technology like the internet is limited to traditional industries.
The impact of technology like the internet is limited to traditional industries.
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Central hub positions are not considered innovative because they only relay information without collecting ideas.
Central hub positions are not considered innovative because they only relay information without collecting ideas.
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Innovation can occur when organizations exploit valuable information from one group for the benefit of another group.
Innovation can occur when organizations exploit valuable information from one group for the benefit of another group.
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Formal and informal rules are the same across all countries.
Formal and informal rules are the same across all countries.
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PESTEL analysis can help identify key drivers for change in specific contexts.
PESTEL analysis can help identify key drivers for change in specific contexts.
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Single-point forecasting indicates a high level of uncertainty in future conditions.
Single-point forecasting indicates a high level of uncertainty in future conditions.
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Changes in social and legislative factors can significantly affect industries like supermarkets more than banks.
Changes in social and legislative factors can significantly affect industries like supermarkets more than banks.
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All strategic decisions can be made without the need for forecasting future conditions.
All strategic decisions can be made without the need for forecasting future conditions.
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Range forecasting is utilized when organizations have high certainty about future outcomes.
Range forecasting is utilized when organizations have high certainty about future outcomes.
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The concept of 'varieties of capitalism' relates to the differences in institutional environments across countries.
The concept of 'varieties of capitalism' relates to the differences in institutional environments across countries.
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Environmental factors likely have a low impact on the success or failure of strategies in the industry.
Environmental factors likely have a low impact on the success or failure of strategies in the industry.
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Alternative futures forecasting focuses on a range of continuous likelihoods.
Alternative futures forecasting focuses on a range of continuous likelihoods.
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Megatrends are changes that occur quickly and often influence many activities.
Megatrends are changes that occur quickly and often influence many activities.
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Inflexion points are moments when trends shift direction, potentially altering forecasts.
Inflexion points are moments when trends shift direction, potentially altering forecasts.
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Scenarios provide specific strategies for dealing with future environments.
Scenarios provide specific strategies for dealing with future environments.
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Weak signals are considered advanced signs of future trends.
Weak signals are considered advanced signs of future trends.
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Forecasting is largely unnecessary when certainty is high.
Forecasting is largely unnecessary when certainty is high.
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The central projection in probability forecasting is identified as the least probable outcome.
The central projection in probability forecasting is identified as the least probable outcome.
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Scenarios are typically utilized in contexts with low uncertainty.
Scenarios are typically utilized in contexts with low uncertainty.
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Study Notes
Business Strategy
- The environment presents both opportunities and threats to organizations.
- Examples include:
- Canal+ or SKY's challenges due to the emergence of new competitors like Netflix and Amazon.
- Alibaba's rapid growth fueled by technological advances, Chinese political and economic changes, and international regulations.
Macro-Environment Analysis
- The macro-environment encompasses broad environmental factors affecting organizations, industries, and sectors.
- An industry or sector consists of organizations producing similar products or services. Examples include the automobile and pharmaceutical industries.
- Organizations compete within markets, and competitors include companies like Ford and Fiat competing with Renault.
PESTEL Analysis
- PESTEL analysis is a useful tool for forecasting and scenario development.
- Strategies should not solely focus on economic aspects but also consider non-market factors.
- Market environment factors, including suppliers, customers, and competitors, are critical. Companies compete through shared resources, revenue, and profits.
- Non-market considerations, such as social, political, legal, and ecological factors influenced by economic factors, should be included.
Politics
- Two key steps in political analysis are identifying the importance of political factors and carrying out political risks analysis.
- Two variables for identifying the importance of political factors: the state's economic role (e.g., major customer, supplier, or financier) and exposure to civil society (lobbyists, pressure groups, media).
- Industries like defense have high state involvement and civil society exposure, while industries like hotels have low exposure.
- Political risk analysis has macro-micro and internal-external dimensions.
- Macro-risks pertain to the whole country, while micro-risks concern specific organizations within a country.
- Internal-external factors consider events originating within a country (e.g., government changes) and knock-on effects from outside the country (e.g., oil price drops).
Economics
- Macroeconomic influences include currency exchange rates, interest rates, and fluctuating economic growth rates.
- Economic cycles involve regular rises and falls in growth rates, frequently followed by slowdowns or recessions.
- Companies in discretionary spend industries (e.g., restaurants) and high fixed cost industries (e.g., airlines, hotels, steel) are vulnerable to economic cycles due to easily postponable purchases and high overhead costs respectively.
Social
- Social influences impact demand and supply, influencing innovativeness and effectiveness of organizations.
- Key social factors influencing demand/supply include demographics, geography, distribution changes, and culture.
- Examples include population aging in Western societies, market concentrations in specific geographic locations, changes in wealth distribution shifting consumer habits, and changing attitudes influencing business strategies.
- Organization networks are also considered part of social analysis as members in the same organizations interact more often than with the outside world, as suppliers, customers, competitors, and regulators/pressure groups.
- The concepts of network density, central hub positions, and broker positions help understand these effects.
- "Small worlds" describe densely interconnected networks where even outsiders can affect the network, and are affected by the network, quickly.
Technology
- Technological advancements, like the Internet, nanotechnology, and new composite materials, impact several industries.
- Technologies frequently lead to new opportunities for some organizations and challenges for others (e.g., Spotify vs. traditional music companies).
- Five primary indicators of innovative activity include research & development budgets; patenting activity; citation analysis; new product announcements; and media coverage.
- Technology roadmaps project future demands, identify technological alternatives, choose the most promising ones, and outline development timelines.
Ecological
- Environmental issues like pollution, recycling, and global warming are factors that need to be considered.
- Environmental regulations, while imposing additional costs, can also lead to new opportunities. (e.g., mobile phone recycling).
- Challenges organizations may face include direct pollution obligations, product stewardship, and sustainable development. Product stewardship considers the whole life cycle of a product through the supply chain, from production to end-of-life disposal.
- Three factors create pressures on organizations to consider ecological factors include environmental concerns, pressures from within the organizational field, and ecological values and standards of organizations.
Legal
- Legal factors, often referred to as a "rules of the game," include labor standards, environmental regulations, consumer protection, taxation, and reporting requirements affecting companies.
- Legal constraints can be relaxed through deregulation for new business opportunities, but such actions can also hinder organizations.
- Informal norms/rules are important to consider, as they can vary considerably between countries, creating different institutional environments.
Key Drivers and Forecasting
- PESTEL analysis generates a complex list of issues, but identifying key drivers within a specific context is important.
- Environmental factors significantly impacting industries and organizations should be identified.
- Forecasting approaches include single-point forecasts which predict a single future value, range-forecasting which presents a range of likely outcomes; and alternative-future forecasting which considers various possible, but distinct, futures.
- The importance of predictability within the context of strategic decision making is highlighted.
Directions of Change
- Three concepts to consider in understanding trends and turning points include megatrends which influence activities over decades; inflexion points when trends change abruptly; weak signals which signal trends or events early in their formation, and indicate possible anomalies or changes.
Scenarios
- Scenarios offer alternative views of how macro-environmental factors might evolve in the long term.
- They aren't strategies but provide alternative environments for strategy development.
- Scenario analysis is used when environments are highly uncertain.
- Different methods of using scenario development include differentiating it from alternative futures forecasting, concentrating on learning over predicting, and considering inter-related environmental factors.
Scenario Process
- Defining the scope for specific scenarios (e.g., industry, region, timeframe); identifying key drivers or factors with potential impact; developing scenarios; identifying scenario impacts; and monitoring developments relevant to the scenarios using established indicators constitute a common scenario-building process.
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Description
This quiz explores the nuances of political risk analysis and the role of nonmarket strategies in organisations, particularly in the context of civil society influences and state ownership. Additionally, it addresses factors affecting the luxury goods market and the dynamics of organisational fields. Test your understanding of these complex interactions and their implications.
