Introduction (Graphics Not Available)
The world has grown increasingly complex, resulting from the greater interdependence among world economies (Thompson, 2002). Successful organization is largely determined by how well the organization adjusts all its tangible and intangible properties to keep itself on track with its surrounding (Armenakes & Bedeian, 1999). Strategy was concerned to manage firm’s activities and resources to the environment in which it operates. This essay will analyse the micro and macro external environment in the part five years (2000 to 2006) of IBM Company by using PESTEL and five forces model to analyse in the first part. The second part will discuss about the advantages and disadvantages of the two possible alternative strategies for IBM.
Part 1: Analysis of Micro and Macro External Environment
1.1 PESTEL Analysis
The external factors can be divided into six broadly categories which are political, environment, social, technology, environment and legal (Johnson, 2005). Such external factors usually are out of the firm's control and sometimes present themselves as threats. In this case, political factor, environmental factor and technology factor will be used to analyse the computer technology industry.
Political factor
The Iraq War is an ongoing war which began with a United State led invasion of Iraq in 2003. This war affected to the world economy, especially, USA who directly war with Iraq. Fear of a possible U.S. led war with Iraq soured investors’ sentiment in U.S. stock market. Furthermore, technology stocks in European market plunged following down results from sector giants Microsoft and IBM stocks fell down (CNN.com). This is because of everyone is negative on Iraq and in combination ...
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...ion.cnn.com/2003/BUSINESS/01/17/markets.europe/index.html. Accessed on 31/5/2007
• My solution info.com IBM market share
http://www.mysolutioninfo.com/news-display.aspx?Code=960&t=IBM%20Number%20One%20in%20Worldwide%20Application%20Development%20Software%20Market%20Share. Accessed on 1/6/2007
• Network world U.S. military
http://www.networkworld.com/news/2006/101206-us-military-to-test-ibms.html?page=1 Accessed on 29/5/2007
• New.com IBM layoff employees
http://news.com.com/IBM+to+cut+almost+1%2C600+more+jobs/2100-7252_3-6187552.html?tag=topicIndex Accessed on 2/6/2007
• IBM company
www.IBM.com Accessed on 28/5/2007
• IBM transfers top buyer to China Sold PC business to Lenovo
http://news.bbc.co.uk/2/hi/business/6045482.stm Accessed on 30/5/2007
• SARS BBC News
http://www.bbc.co.uk/health/conditions/sars1.shtml#what_is_it? Accessed on 1/6/2007
* The economy in the US and around the World was affected since the war on terror began.
Saddam’s government collapse in the US impacted the country of Iraq by creating a democratic government where the citizens have rights. Two years earlier Afghanistan was invaded by the us because their government was believed to be an aid to Al Qaeda and Osama bin Laden. Later the US defeated Afghanistan’s government, the Taliban and established a democratic government like in Iraq today. We can infer that the Middle East has complicated problem going on with the region, that not even the u.s. president can figure out. (Doc C) all in all the US has impacted the region of the Middle East and build a strong relationship with it over the past
The course of the Iraq War has been shaped immensely by the geography of the region for nearly 40 years. The movement of Iraq forces throughout the region, for better or worse, has had many effects on the way in which the way has gone. For instance, these forces often threatened certain resources needed by many countries and regions. The result of this was often war or conflict, concluding in a devastating amount of casualties. This also left Iraq with debt as well as very low resources such as food and water. The basis of the whole entire war has been on certain aspects of the geography, which has had a result of creating many small wars throughout this whole ordeal as well as many other consequential occurrences.
The impact this had on the American economy was the first step towards the Great Depression. The involvement of the U.S. in the war was something that was certain to happen. The war was affecting our economy even before the U.S. was involved and, the American soldiers had to help to end the war before the damage became
Just contrary to Porter’s five forces model, the SWOT analysis deals with both internal and external variables and forces of the company. The main quality of this analysis is that it is helpful in tracing out the real position of the company along with its strengths, weaknesses, opportunities and threats or the self-assessment. Consequently, it offers the company a proper framework to formulate, vision plans, strategies and goals. Here, it should also be assumed that the SWOT analysis includes both internal and external factors, whereas Porter’s five forces model only deal with external factors ignoring the internal factors.
Organizational Change "The effectiveness of organizational change is greatest when a firm’s strategy is consistent with environmental conditions and there is internal consistency." (D A Nadler, 2003:204) The only thing that is constant in this world is change and this is widely acknowledged by many in the world, may it be a corporation or a social forum or a governmental body. What comes in this world has to experience change in the light of environmental elements and pressures and influences, internal or external. The study of organizational behavior gives that environmental factors are the political, legal, economic, demographic, technological, social and societal. While these are the external environmental factors that are and cannot be counted among the controllable factors for an organization, they do in fact influence organizational structure, policies and strategies. In turn, the internal environment of the organization, that is very much controlled by the management of the organization and comprises of the top to bottom managerial levels, the staff, the employees, the board of directors, the owners etc. this internal environment, is to a great extent the result of external environmental factors, the change of which results in the direct impact on the internal environment of the organization. As such in lieu of external environmental factors; change agents with in the organization tend to accept the change in their external factors and tries to bring about a compatible change within the internal environment of the organization. The effectiveness of the change that is being brought about with in the organization as a result of the changing external environmental forces is best when, as described by Nadler, the internal facto...
In determining the competitive intensity and attractiveness of the market, Porter’s five forces is a framework that would help analyze the manufacturing industry of Lincoln Electric and observe the external and internal environmental factors that influence business strategy development for companies within the industry. The five forces are assumed to determine competitive power in a business situation in which these five forces are Supplier Power, Bargaining Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry.
Environmental – External environmental factors are forces or trends that can affect a business whether it is an opportunity, threat, or constraint. They can be divided into three interrelated subcategories of remote, industry, and operating environments. The remote environment includes factors beyond a company’s operating situation such as the economic, social, political, technological, and ecological factors. The industry environment includes factors that have more of a direct influence on a company’s business such as entry barriers, competitor rivalry, the availability of substitutes, and the bargaining power of buyers and suppliers.
Throughout the global economic environment the desire to out-perform the competition is always present. In every situation, the companies who do better are the ones with superior strategy (Rothaermel, 2013). Strategic management is therefore important in every company, no matter what industry or market they operate in; and as stated by M. Carpenter and G. Sanders, 2013, is described as "The process by which a firm manages the formulation and implementation of its strategy". Strategic management is a constant topic under discussion with different schools of theorists with different beliefs and attitudes which is described as "A tense array of disagreement" (Rees, 2012).
The deep analysis of the macro-environment is key to the organisations in order to understand which factors are impacting their operations. The main purpose of PESTLE analysis (Political, Economic, Social, Technological, Legal and Environmental) is to identify those factors that have an impact on the organisation but are outside its control area. Together with other frameworks (such as Porter’s ‘5 forces’), PESTLE framework is required to develop a comprehensive analytical strategic process.
In a world of free trade, growing competition and accessibility to foreign markets, the need for methodical market analysis and assumptions is steadily rising in today’s business environment. It is just a normal way of thinking to primarily intent to eliminate the financial before entering a new and foreign market. This suggests that enterprises have to develop an overall strategy for their business in order to gain competitive advantage and consequently market share. With the words of Michael E. Porter, professor at Harvard University and leading authority on competitive strategy, this desirable market success is indirectly linked to the individual structure of a market. The unique structure of a single market influences the strategic behaviour and the development of a competitive strategy within a firm. The competitive strategy finally decides whether a company performs successfully on the market or not. Referring to this interpretation of business success, M. E. Porter established his five forces framework that enables directives to gather useful information about the business environment and the competitive forces in industries.
...t's small) it had a major impact internationally. Since Saddam Hussein was left in power and Iraq kept its military, many problems arose. The Iraq War, caused by this decision, killed many people and destroyed the country of Iraq. It changed to heroic and innocent profile the US had gained after the Gulf War and 9/11 to a killer and 'the world's policeman'. The US's image had been scarred and Iraq was in shambles. The US economy had been hurt because of the spending needed to support the Iraq War, and was hurt more when an economic crisis arose. Around $5,000,000,000,000 (five trillion dollars) were added to the national debt during the Iraq War (2003-2010). Because of the effort to destroy the supposed WMDs, which would have been possible because of the supplies left in Iraq, and to kill Saddam Hussein, many problems have arisen now and many more will soon come up.
Hitt, M., Ireland, and Hoskisson, R. (2009).Strategic management: Competitive and Globalization, Concepts and Cases. In M.Staudt & Stranz (Ed).
Environmental factors affect an organisation in 2 ways. They set limits and pose threats and they also provide opportunities and challenges. A change in the government export policy may suddenly threaten an export oriented organisation. A reduction in the rate of interest may provide cheap finance to an organisation.