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Understanding External Forces in Management: Political, Technological, and Competitive Dynamics

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In this lecture, we explore essential external forces impacting organizational management, including political, governmental, and legal factors that present opportunities and threats. We also examine technological forces, particularly revolutionary changes due to the internet and innovations. Understanding competitive forces, and the significance of gathering intelligence on competitors, is crucial for strategy formulation. We discuss the evolving landscape of credit availability, interest rates, and economic conditions that organizations must navigate to succeed in a dynamic global economy.

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Understanding External Forces in Management: Political, Technological, and Competitive Dynamics

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  1. Management Practices Lecture-7

  2. Recap • Economic Forces • Availability of credit • Interest rates • Social, cultural, demographic and environmental forces • Life expectancy rates • Per capita income

  3. Today’s Lecture • Political, Govt., & Legal Forces • Technological Forces • Revolutionary technological forces • Internet changes the nature of opportunities and threats • Competitive Forces • Collection and evaluation of information on competitors

  4. Political, Govt., & Legal Forces • Political, Governmental, and Legal Factors Represent Key Forces • Federal, state, local, and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations. • Political, governmental, and legal factors therefore can represent key  opportunities or threats for both small and large organizations • For industries and firms that depend heavily on government contracts or subsidies, political forecasts can be the most important part of an external audit.

  5. Political, Govt., & Legal Forces • Government Regulations • Key opportunities & key threats • Tax rates • Lobbying efforts • Patent laws

  6. Political, Govt., & Legal Forces Increasing Global Interdependence • Impact of political variables • Formulation of Strategies • Implementation of Strategies • Strategists in a global economy • Forecast political climates • Legalistic skills • Diverse world cultures

  7. Political, Govt., & Legal Forces Globalization of Industry • Worldwide trend toward similar consumption patterns • Global buyers & sellers • E-commerce • Instant transmission of money & information across continents

  8. Key Political, govt., & legal variables • Government regulation/deregulation • Tax law changes • Special tariffs • Political Action Committees (PACs) • Voter participation rates • Number of patents • Changes in patent laws • Environmental protection laws • Equal employment legislation

  9. Key Political, govt., & legal variables • Import-export regulations • Political conditions in other countries • Government budgets • World oil, currency, & labor markets • Location and severity of terrorist activities

  10. Technological Forces Revolutionary technological forces: • Profound impact on organizations • Internet • Semiconductors • XML technologies • UWB communications

  11. Technological Forces Internet changes the nature of opportunities and threats -- • Alters life cycle of products • Increases speed of distribution • Creates new products and services • Eases limitations of geographic markets • Alters economies of scale • Changes entry barriers

  12. Technological Forces • Altering the life cycles of products by • Increasing the speed of distribution • Creating new products and services • Erasing limitations of traditional • Geographic markets • Changing the historical tradeoff between production standardization and flexibility

  13. Competitive Forces • Collection and evaluation of information on competitors is essential for successful strategy formulation • Virtually competition in all industries can be described as intense.

  14. Competitive Forces Identifying rival firms • Strengths • Weaknesses • Capabilities • Opportunities • Threats • Objectives • Strategies

  15. Competitive Forces Key Questions About Competitors: • Their strengths • Their weaknesses • Their objectives and strategies • Their responses to all external variables (e.g. social, political, demographic, etc.) • Their vulnerability to our alternative strategies

  16. Competitive Forces Key Questions About Competitors: • Our vulnerability to successful strategic counterattack • Our product and service positioning relative to competitors • Entry and exit of firms in the industry • Key factors for our current position in industry • Sales and profit rankings of competitors over time • Nature of supplier and distributor relationships • The threat of substitute products or services

  17. Competitive Forces 7 Characteristics of most competitive U.S. firms: • Market share matters • Understand what business you are in • Broke or not, fix it • Innovate or evaporate • Acquisition is essential to growth • People make a difference • No substitute for quality

  18. Summary • Political, Govt., & Legal Forces • Technological Forces • Revolutionary technological forces • Internet changes the nature of opportunities and threats • Competitive Forces • Collection and evaluation of information on competitors

  19. Next Lecture • Decision Making • Types of Decision Making • Models of Decision Making • Devil’s Advocacy and Dialectical Inquiry

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