Chapter 5: Micro, Macro & Market

1. Chapter 5: Micro, Macro & Market Environments

2. RECAP: WHAT IS MACRO ENVIRON? External Factors influencing a business Mangt has NOCONTROL over them Events r often BIG & COMPLEX Examples: Tsunami (affects whole country/world or community) Identifying MACRO factors is done through PESTLE

3. WHAT IS PESTLE??? P POLITICAL ENVIRONMENT E ECONOMICS S SOCIAL factors T TECHNOLOGY L LEGISLATION E Environmental factors EXTENDED PESTLE INCLUDES EXTRA: P Physical E Ethical

4. TRENDS or CRISIS • External environment very VOLATILE due to fast technology changes & globalisation • Events in macro environment occur either by • TRENDS (Predictable Changes eg Labour developments & economic trends) OR • CRISIS (Unpredictable changes eg flood, mad cow disease)

5. WHAT’S A STRATEGY??? Very specific plan of action To effectively use resources To achieve organisation objectives ADVANTAGES of strategies: Gives DIRECTION Ensures CONSISTENCY in decision making DIFFERENTIATESmngtROLES & responsibilities Puts broader economy into perspective Anticipates CHANGES in environments Helps create COMPETITIVE ADVANTAGE

6. 8 STEPS to IMPLEMENT MNGT STRATEGY • DEFINE co.’s vision, mission & objectives • ANALYSE different environments in detail: • MICRO using e.g. SWOT • MARKET using e.g. SWOT • MACRO using e.g. PESTLE • Possible ISSUES a co. should consider when choosing strategy: • ROI • RISK factors • Potential for GROWTH • Co. Image • Effect of decision on o.ship • Political (BBBEE) or Social (AIDS)

7. 8 Steps (Cont.) IDENTIFY various strategic options available EVALUATE & Analyse viability of each option- RANK in order PLAN implementation of chosen strategy IMPLEMENT chosen strategy MONITOR & CONTROL- manage changes

8. DIFFERENT STRATEGIES • CORPORATE: • GROWTH • DECLINE • CORPORATE COMBINATION • Joint Venture • Merge • Takeover • GENERIC: • LOW COST • DIFFERENTIATION • FOCUS (Niche)

9. EVENTS from TRENDS EVENTS are from Trends OR Crisis Trends r PREDICATABLE- pre-empt what’s happening & plan ahead: Environmental Scanning Watch competitors Similar industries Learn from DEVELOPED nations Seasonal- learn for next time

10. Events from CRISIS • Crisis: unforeseen circumstances • Have CONTINGENCY (what if...) plans • Eg 9/11 affected whole economy • 2 possible types of strategies to manage crisis: • RISK MNGT ASSESSMENT Strategies • DECISION TREES

11. RISK MNGT ASSESSMENT STRAT Pre-deciding“WHAT WOULD HAPPEN IF...” Scenario Planning Assess POTENTIAL physical 0r health RISKS Put contingency plans in place Eg. Insuranceco.s use this to det. Yr RISK PROFILE Eg. FACTORY uses this to have a plan in the event of THREAT. Would be a detailed plan

12. Risk Mangt Assessment Factory Example • Factory Risk ASSESSMENT Would Specify: • Who in charge, duties • Other critical responsibilities • EMERGENCY EQUIP: Spare phones/radios, First Aid, Tel Numbers, Ee records • ESCAPE ROUTES & PROCEDURES: Eg deactivate lifts in a fire • TRAIN WORKERS: Train & practise evacuation In the event of emergency, Ees feel more in control as they know what to do, and who is in charge of what area of responsibility.

13. DECISION TREES Graphically shows options for COMPARISONbetw diff options avail. Promotes logical decision making Helps CLARIFY avail options Benefit is poss options r QUANTIFIED so each decision process can be CALCULATED and a value reached that shows PROBABILITY success of each option.