Analysis Of The Global Macroenvironment


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Analysis Of The Global Macroenvironment

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