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Outline
· External Analysis
o PESTEL
§ Political Factors
· Processes & actions of government bodies
· Firms can shape this factor through:
· Lobbying
· Public Relations
· Contributions
· Litigation
§ Economic Factors
· Largely macro-economic
· Examples include:
o Growth rates
o Levels of employment
o Interest rates
o Price stability
o Currency exchange rates
§ Sociocultural Factors
· Society’s cultures, norms, and values
o Are constantly in flux
o Differ across groups
· Demographic trends
o Present opportunities and threats
o Population characteristics related to age, gender, family size, ethnicity, sexual orientation, religion, and socioeconomic class
· Technological Factors
o Application of knowledge
§ To create new processes
§ To create new products
§ Innovations in process technology:
o Lean manufacturing, Six Sigma quality, and biotechnology
o Innovations in product technology:
§ Smartphones, computer tablets, and high-performing electric cars such as the Tesla Model S
· Ecological Factors
o Involve environmental issues, such as:
§ Natural environment
§ Global warming
§ Sustainable economic growth
o Also provide business opportunities
· Legal Factors
o Official outcomes of political processes:
§ Laws
§ Mandates
§ Regulations
§ Court decisions
o Industry deregulations affect multiple industries:
§ Airlines, telecom, energy, and trucking
o Governments can achieve desired outcomes:
§ To buy zero-emission vehicles, the U.S. government offers a $7,500 federal tax credit
· Internal Analysis
o Core Competencies
§ Unique strengths
§ Embedded deep within a firm
§ Allow a firm to differentiate its products and services from those of its rivals
§ Results in:
· Creating higher value for the customer or
· Offering products and services at lower cost
o Examples:
o Ikea: Superior in designing functional home
furnishing at low cost
· Resources, Capabilities and Activities to help Deliver core competencies
· Strategic fit
o Leveraging internal strengths to exploit external opportunities
End 1000 (words)
Appendix
o SWOT Analysis
o Porter Five Forces
o VRIO Decision Tree
Case Analysis for Compsis
Name
Institution/Affiliation
Date
Since its establishment, Compsis experienced steady growth. The company dominated the Brazilian market through the provision of systems integration for electronic toll collection (ETC). The management of the company also established a strong working relationship with the Brazilian government hence gaining positive international reputation. However, the success of Compsis was in jeopardy in 2004 after the company incurred heavy losses (Lehrich et al., 2009). The loss in revenues was attributed to the failure of the Brazilian government to timely award new toll road construction rights to concessionaires. Hence, it is important to analyze both the internal and external variables that influenced the operations at Compsis.
External Analysis
PESTLE Analysis
Karlssonet al. (2016) explains that “PESTLE is more of an acronym for political, economic, social, technological, environmental and legal factors respectively.” Macro-environment variables in an economy are analyzed using this tool of analysis.
Political factors
The operations at Compsis were majorly affected by political factors. In 2004, the company’s revenue fell to US$3.3 million, chiefly because of the delays in the award of new toll road construction rights to concessionaires by the Brazilian government.
Economic factors
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