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Chapter 5: Micro, Macro & Market

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Chapter 5: Micro, Macro & Market. Environments. RECAP : WHAT IS MACRO ENVIRON?. External Factors influencing a business Mangt has NO CONTROL over them Events r often BIG & COMPLEX Examples: Tsunami (affects whole country/world or community)

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recap what is macro environ
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

what is pestle
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

trends or crisis
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)
what s a strategy
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

8 steps to implement mngt strategy
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)
8 steps cont
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

different strategies
DIFFERENT STRATEGIES
  • CORPORATE:
    • GROWTH
    • DECLINE
    • CORPORATE COMBINATION
                • Joint Venture
                • Merge
                • Takeover
  • GENERIC:
    • LOW COST
    • DIFFERENTIATION
    • FOCUS (Niche)
events from trends
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

events from crisis
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
risk mngt assessment strat
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

risk mangt assessment factory example
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.

decision trees
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.

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