Org n Man

Core Concepts

1. Competitive Advantage

   • Unique strengths enabling a firm to outperform rivals (e.g., lower costs, superior quality).

2. Environmental Uncertainty

   • Lack of complete information about present/future business conditions.

3. Environmental Complexity

   • Numerous dynamic factors (political, economic, social, technological) affecting operations.

Local Business Environment

4. Industry

   • Group of firms offering similar products/services (e.g., shoe manufacturing industry).

5. Porter’s Five Forces (Industry Analysis Framework):

   • Rivalry Among Existing Firms:

     • Competition intensity (e.g., many shoe brands → high rivalry).

   • Bargaining Power of Suppliers:

     • Control over input prices (e.g., few leather suppliers → high power).

   • Bargaining Power of Buyers:

     • Customer influence on prices (e.g., many shoe sellers → buyers dictate prices).

   • Threat of New Entrants:

     • New competitors (e.g., easy market entry → higher threat).

   • Threat of Substitutes:

     • Alternative products (e.g., sandals replacing sneakers).

International Business Environment

6. Global Management

   • Managing operations across countries (e.g., adapting to foreign cultures).

7. Globalization

   • Growing interdependence of markets/countries (e.g., APEC, AFTA agreements).

8. E-commerce

   • Online business enabled by technology (e.g., Amazon, Lazada).

Ways to Compete

9. Cost Leadership

   • Competing via lower prices (e.g., budget airlines).

10. Quality Differentiation

    • Unique product features (e.g., Apple’s ecosystem).

11. Speed/Flexibility

    • Rapid delivery/response (e.g., Zara’s fast fashion).

12. Innovation

    • New products/methods (e.g., Tesla’s electric cars).

Global Expansion Strategies

13. Exporting/Importing

    • Selling locally abroad (export) or buying foreign goods (import).

14. Foreign Subsidiary

    • Fully owned overseas branch (e.g., Toyota USA).

15. Licensing

    • Selling rights to produce a product (e.g., Disney licensing characters).

16. Franchising

    • Replicating a business model (e.g., Jollibee in the Middle East).

17. Joint Venture

    • Shared ownership with a foreign partner (e.g., Sony-Ericsson phones).

18. Strategic Alliance

    • Collaboration without equity (e.g., Starbucks-Barnes & Noble cafes).

Key Organizations

19. APEC (Asia-Pacific Economic Cooperation)

• Promotes free trade in the Asia-Pacific region.

20. AFTA (ASEAN Free Trade Agreement)

• Reduces tariffs among Southeast Asian nations.

Profit Drivers in Global Business

21. Access to Inputs

    • Cheaper/more resources (e.g., outsourcing labor).

22. Lower Production Costs

    • Manufacturing in low-wage countries (e.g., Vietnam).

23. Larger Markets

    • Expanded customer base (e.g., Netflix global streaming).

Corporate Social Responsibility (CSR), also known as the "Triple Bottom Line" framework developed by John Elkington:

1. People (Social Responsibility)

• Focus: Fair and beneficial treatment of employees, communities, and society.

• Examples:

  • Ethical labor practices (fair wages, safe working conditions).

  • Diversity and inclusion programs.

  • Community development (education, healthcare initiatives).

2. Planet (Environmental Responsibility)

• Focus: Minimizing environmental impact and promoting sustainability.

• Examples:

  • Reducing carbon emissions/waste.

  • Using renewable energy/recycled materials.

  • Supporting conservation efforts.

3. Profit (Economic Responsibility)

• Focus: Ethical profitability that benefits stakeholders without harming People/Planet.

• Examples:

  • Transparent financial practices.

  • Investing in sustainable technologies.

  • Creating shared value (e.g., eco-friendly products that drive revenue).

PEST and Macro-Environmental Factors, key tools for analyzing a business’s external environment:

PEST Analysis

A framework to scan the external macro-environment affecting industries:

• Political Factors

  • Government policies, trade laws, tax regulations, political stability.

  • Example: Tariffs on imports impacting product costs.

• Economic Factors

  • Inflation, interest rates, GDP growth, unemployment, exchange rates.

  • Example: Recession reducing consumer spending.

• Social Factors

  • Demographics, cultural trends, consumer behavior, health/wellness trends.

  • Example: Aging population increasing demand for healthcare products.

• Technological Factors

  • Innovations, automation, R&D, digital infrastructure.

  • Example: AI disrupting customer service jobs.

Extended Versions (PESTLE/PESTEL)

• Adds two more dimensions:
  5. Legal Factors

  • Employment laws, health/safety regulations, antitrust laws.

  • Example: GDPR (data privacy laws) affecting tech companies.

  6. Environmental Factors

     • Climate change, sustainability pressures, natural resource scarcity.

     • Example: Carbon taxes pushing firms toward renewable energy.

Macro-Environmental Factors

Broader external forces beyond a company’s control:

• Globalization:

  • Cross-border trade, cultural exchange.

• Demographic Shifts:

  • Population growth, migration patterns.

• Socio-Cultural Trends:

  • Values, ethics, lifestyle changes (e.g., remote work).

• Technological Disruption:

  • AI, blockchain, automation.

• Natural Disasters/Climate: Risks like floods, pandemics.

Key Difference

• PEST: Focused on industry-level external factors.

• Macro-Environment: Includes all overarching societal/global forces.