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Analysis Of The Global Macroenvironment

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  • 1. Analysis of The Global Macroenvironment Adam Dilip Mutum FMA3093
  • 2. Introduction
    • Macro (or ‘far’) environment is the part of the environment over which the business can rarely exert any direct influence but to which it must respond.
    • Analysed by categorizing environmental influences at the macro-level into broad groupings.
  • 3. STEP Analysis
    • Acronym also rearranged as PEST
    • Extended forms of PEST analysis are used,
      • SLEPT (plus Legal) or
      • the STEEPLE analysis: Social/demographic, Technological, Economic, Environmental (natural), Political, Legal and Ethical factors.
      • Geographical factors may be relevant.
  • 4. Sociocultural Factors
    • The social and cultural influences on business vary from country to country.
      • Income distribution
      • Demographics, Population growth rates, Age distribution
      • Labor / social mobility
      • Lifestyle changes
      • Work/career and leisure attitudes
      • Entrepreneurial spirit
      • Education
      • Fashion, hypes
      • Health consciousness & welfare, feelings on safety
      • Living conditions
  • 5. Sociocultural Factors
    • Questions:
      • What is the dominant religion?
      • What are attitudes to foreign products and services?
      • Does language impact upon the diffusion of products onto markets?
      • How much time do consumers have for leisure?
      • What are the roles of men and women within society?
      • How long are the population living? Are the older generations wealthy?
      • Do the population have a strong/weak opinion on green issues?
  • 6. Technological Factors
    • Technology is vital for competitive advantage, and is a major driver of globalization.
      • Government research spending
      • Industry focus on technological effort
      • New inventions and development
      • Rate of technology transfer
      • Life cycle and speed of technological obsolescence
      • Energy use and costs
      • (Changes in) Information Technology
      • (Changes in) Internet
      • (Changes in) Mobile Technology
  • 7. Technological Factors
    • Questions:
      • Does technology allow for products and services to be made more cheaply and to a better standard of quality?
      • Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, etc?
      • How is distribution changed by new technologies e.g. books and flight tickets via the Internet, etc?
      • Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?
  • 8. Economic Factors
    • Marketers need to consider the state of a trading economy in the short and long-terms.
      • Economic growth
      • Interest rates & monetary policies
      • Government spending
      • Unemployment policy
      • Taxation
      • Exchange rates
      • Inflation rates
      • Stage of the business cycle
      • Consumer confidence
  • 9. Political Factors
    • Has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses.
      • Environmental regulations and protection
      • Tax policies
      • International trade regulations and restrictions
      • Contract enforcement law
      • Consumer protection
      • Employment laws
      • Government organization / attitude
      • Competition regulation
      • Political Stability
      • Safety regulations
  • 10. Political Factors (incl. Legal)
    • Questions :
        • How stable is the political environment?
        • Will government policy influence laws that regulate or tax your business?
        • What is the government's position on marketing ethics?
        • What is the government's policy on the economy?
        • Does the government have a view on culture and religion?
        • Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?
  • 11.
    • A PEST analysis can be done via workshops using brainstorming techniques.
    • Usage of PEST analysis can vary from business and strategic planning, marketing planning, business and product development to research reports.
  • 12. Porter’s Diamond
    • Introduced by Porter (1990)
    • Book: The Competitive Advantage of Nations
    • Can help understand the competitive position of a nation in global competition
    • Competitive Advantage of nations has been the outcome of 4 interlinked advanced factors and activities in and between companies in these clusters.
  • 13. Porter’s Diamond Chance
  • 14. Porter’s Diamond
    • Factor endowments: nation’s position in factors of production such as skilled labor or infrastructure necessary to compete in a given industry.
    • Demand conditions: the nature of home demand for the industry’s product or service.
    • Related and supporting industries: the presence or absence in a nation of supplier industries or related industries that are nationally competitive.
    • The Business’s strategy, structure and rivalry: the conditions in which companies are established, organized, and managed and the nature of domestic rivalry.
  • 15. Porter’s Diamond
    • Success occurs where these attributes exist.
      • More/greater the attribute, the higher chance of success.
      • The four condition s need to be favourable if an industry in a country is to gain competitive advantage
    • The diamond is mutually reinforcing.
  • 16. Porter’s Diamond
    • Factor Conditions
      • Basic can provide an initial advantage.
      • Must be supported by advanced factors to maintain success.
      • "Non-key" or basic or general factors, such as unskilled labor and raw materials, do not generate sustained competitive advantage.
      • Porter argues that the "key" factors of production (or specialized factors) are created, not inherited.
  • 17. Porter’s Diamond
      • Specialized factors of production are skilled labor, capital and infrastructure.
      • Specialized factors involve heavy, sustained investment. They are more difficult to duplicate.
      • This leads to a competitive advantage, because if other firms cannot easily duplicate these factors, they are valuable.
  • 18. Porter’s Diamond
    • Role of Chance
      • Events like wars, technological decisions by foreign govts., significant shifts in world financial markets, etc. can also affect national competitive advantage
    • Role of Government
      • Role "acting as a catalyst and challenger; it is to encourage - or even push - companies to raise their aspirations and move to higher levels of competitive performance …" .

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