Environmental Analysis
Introduction
There are three factors that have principal roles in deciding the constraints, opportunities, and threats that any company will face. The remote environment is the first factor which consists of factors that originate beyond any company's operating situation such as technological and/or economic factors. The industry environment is the second factor that influences company's prospects originating in the environment of its industry like competitor rivalry and the bargaining power of buyers and suppliers. The third and final factor is the operating environment which consists of factors that influence a company's competitive situation which includes factors such as competitive position, suppliers, clientele, and creditors. These three sets of factors provide the challenges that a particular company faces in its attempts to attract or acquire needed resources and to profitably market its goods and services (Pearce 2005).
Remote Environment
A factor in the remote environment for Wabtec is in the area in technology.
To avoid obsolescence and promote innovation, a company must be aware of technological changes that might have industry influence (Pearce, 2005). Creative technological adaptations can suggest possibilities for new products, for improvements in existing products, or in manufacturing and marketing techniques (Pearce, 2005). A long-term objective that Wabtec must address is in this area is product innovation. The company needs to introduce distinctive and innovative new products in 2007 and beyond to support emerging consumer trends. Wabtec faces competition in product innovation from Lockheed Martin, their largest competitor and this can have an effect on the organization in the years to come. Finding the right balance between research and development along with a low cost and price strategy will require careful planning.
Industry Environment
The degree of competition in an industry depends on factor such as the threat of new competitors and/or the magnitude of their current competitor. To establish a strategic agenda for dealing with their competitors, a company must understand how they work in its industry and how they affect the company in its particular situation (Pearce, 2005). The threat of modern products or services is one of the major concerns for Wabtec. With competitors such as Lockheed Martin gaining ground on Wabtec, the company needs to keep its products differentiated at a competitive price and improve customer satisfaction. Wabtec needs to set a long-term goal of improving its research and development so it will help accelerate growth and earning.
Every company has internal and external forces that effect how they operate within the community in which they are located and also within their own walls. These internal and external forces play a strong impact on the company’s profitability and success. These forces have an effect on what consumers they attract or ignore and how they are perceived by those who have the buying power. A mistake any analyzing and implementing measures to assist with these factors could greatly affects a company’s bottom line and success. This is why any company wanting to grow and be successful will need to take all of these forces; sociocultural, technological, economic, environmental and political-legal into consideration in creating their strategic plan.
A firm?s external environment is divided into three major areas : the general, industry and competitor environments. Below is an elaboration in further detail regarding the firm?s opportunities and threats in these three environments.
...t Bosch GmbH, Tenneco and Honeywell. The demand for the products depends on the competitive atmosphere, including the timely development and introduction of new and competitive products and the company’s response to downward pricing to sustain competition. Factors including changes in customer order patterns and competitors’ new products could impact the company’s competitive ability. (Cummins)
Each company or organization belongs to a market industry that includes three components, the remote environment, the industry environment and the operating environment. These factors impact the decisions that organizations make in order to provide the best services and products while maintaining a high profit for the company. Lockheed Martin is a multinational aerospace manufacturer and advanced technology company, formed in 1995 by the merger of Lockheed Corporation with Martin Marietta (Lockheed Martin, 2008). Lockheed Martin is affected by the macroeconomic environment, the economic decisions that the organization itself makes and the industry environment.
Black & Decker (B&D) is a global manufacturer and the world’s largest producer of power tools, power tool accessories, electric lawn and garden tools, and residential security hardware. The company was a pioneer in innovation and development of power tools and has used that position to build strong brand names that enjoy worldwide recognition. Key Causes for Poor Performance in the Professional-Tradesmen Segment The reason B&D has performed poorly in the professional-tradesmen segment is due to the positioning of the B&D brand in this segment. Poor positioning of the brand has resulted in customer confusion and negatively impacted customer perception of the brand in terms of being a quality product. B&D Performance in the Power Tool Industry Overall Any adjustments to B&D’s strategy in the professional-tradesmen segment must not have an adverse impact on their success in the consumer or professional-industrial segments. Therefore, a thorough understanding of the needs of each segment will be important in building a viable strategy to challenge Makita in the professional-tradesmen segment, while continuing to maintain share in the other two segments. _Consumer _Segment Professional-Tradesmen Segment This category consists of professionals who are buying a product for their own use on a job site. Their livelihood depends on the quality and performance, as well as the reflection on their skills that using a particular tool brings from others on the job site. Since they are purchasing their own tools, this segment needs this high quality performance at a reasonable price. However, since Makita and Milwaukee are both priced higher than B&D and are seeing greater success in this category, tradesmen are clearly willing to pay more for a product they perceive will be more effective for their use. Key needs for this market segment include: Performance and quality - {text:change} does the job needed to be done, doesn’t break down, produces high-quality results and more efficiently gets the job done. Reliability and durability - does the job every time and can be used for an extended period of heavy continual use. Safety Support from the Manufacturer – if the product breaks or performs poorly, access to replacement parts and service will be key in maximizing performance up-time.
Businesses cannot change these factors; however they must adapt them to be success in their competitive market. First of all, the economic environment which consists of numerous factors. For instance: Gross Domestic Product, Profit earning rate etc. It has a quick impact on the business which means that if any changes happened in the economic environment business must directly follow it. It could be like bonds for the business or may create new chances. Second feature (factor) is social environment will depend on where the business is exit. Countries have different demographics and culture. Culture will depend on imitation and customs of the region, while demographics depend on the segments of the country if the product can be suitable there or not. For example: Japan has high percentage of old people, however, India has high percentage of young people. After long time social environment will have an excellent effect on the business. Technology relies on how the product quality is improving by using various tools and machines. Any business should proceed the new technology in his industry, therefore he could remain in the competitive
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
In a world of fast-challenging technology, we can only remain competitive by continuously refining and expanding our technical capability.
Environment external :-in the external environment is that put impact on company ability from outside it include all the outside factor that can effect the outside growth of company external environment plays important role to in the development of company as well as market growth of company in Stella Artois there was also effect on company expand in the market one was mature market and another was growth marke...
Two challenges that defense contractors face, in developing and providing innovative new technologies to the military, are long term sustainability in the face of rapid technological development and the U.S. military’s material acquisition process. A defense contractor’s inability to reconcile these two challenges could put the U.S. military at risk of being constantly behind the technological curve, thus weakening its ability to compete with other technologically advanced countries.
...s identified the key factors which affected the external operations of the organisation. These factors have been identified by the organisation and take adequate steps to provide unique customer service and solutions based on the market conditions. While on the other hand industry competitive environment analysis depicts the level of competition in the industry. BHP Billiton is ranked one of the top natural resource leaders in the world due to its assets and portfolio. Among all the five forces of Porters framework, bargaining power of suppliers affected this organisation a lot. Increased labour and shipping expenses force them to increase their product prices. After the evaluation of external environment of the company, three key success factors are found –skills, exploration and sustainable development which play an important role in quality delivery of services.
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.
In analyzing the macro-environment, it is important to identify the factors that might in turn affect a number of vital variables that are likely to influence the organization's supply and demand levels and its costs (Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The "radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization" (Tsiakkiros, 2002). A number of checklists have been developed as ways of cataloguing the vast number of possible issues that might affect an industry. A PEST analysis is one of them that is merely a framework that categorizes environmental influences as political, economic, social and technological forces. Sometimes two additional factors, environmental and legal, will be added to make a PESTEL analysis, but these themes can easily be subsumed in the others. The analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991; Cooper, 2000).
Rahman, S. H. (2006). International Market Selection Process: An Investigation of the Relevance of Business Operating Environment. Journal of International Business Research, 5(1), 73-86.