Principals of marketing Pre lecture Week 2

Module Overview

• Key Quote: ‘TODAY NO COMPANY CAN REST ON ITS LAURELS’ (Samson & Daft, 2015)

• Instructor: Alessandro Bressan

• Contact: alessandro.bressan@nd.edu.au

Dimensions of the External Environment

Environments Affecting Organizations

• Task Environment

  • Customers

  • Suppliers

  • Competitors

  • Labour Market

• General Environment

  • Economic

  • Technological

  • Sociocultural

  • Natural

  • Legal/Political

  • International

General Environment Factors

Technological

• Examples of Influence:

  • E-business models (e.g., Dell with no retail stores)

  • Automation capabilities (e.g., up to 45% of tasks can be automated)

  • Digital currency (e.g., Bitcoin) and its implications

• Organizational Effects:

  • Need to adapt to technological advancements in society.

Sociocultural

• Key demographic characteristics affecting organizations:

  • Multiculturalism and diversity trends

  • Ageing Population changing workforce dynamics

  • Generational Dynamics of Gen Y and Gen Z affecting employment needs

• Organizations must be responsive to changes in societal norms and values.

Legal-Political

• Key aspects of government influence:

  • Laws and Regulations: Occupational health and safety, labor laws, environmental protection, Modern Slavery Act

  • Political Stability and its impact on business operations

• Influence of consumer advocacy and business lobby groups on regulations.

International

• Global Considerations:

  • Supply chain dependencies on international sources (e.g., parts from Malaysia or China)

  • Economic power shifts (e.g., towards China and India)

  • Regulatory impacts from events like Brexit and tariffs

• Organizations must develop a global mindset to successfully compete.

Economic

• Convergence of Economies:

  • Interconnection of national economies through globalization

  • Increased frequency of mergers and acquisitions

• VUCA Factors:

  • Volatility, Uncertainty, Complexity, Ambiguity as key economic influences on management strategies.

Natural

• Elements impacting the organization:

  • Natural resources and environmental factors (water, climate)

  • Increasing pressure for sustainable operations and environmental awareness from consumers

• Regulatory measures promoting environmental protection.

Tools for Environmental Scanning

PESTLE Analysis

• Utilized to assess external factors that impact business risks and opportunities

• Critical for strategic planning and understanding market conditions.

The Task Environment

• Direct Influencers:

  • Customers

  • Suppliers

  • Competitors

  • Labour market

• The task environment directly affects the organization's performance.

Customers

• Definition: Groups/individuals consuming the organization's products/services

• Impact on success/failure of organizations necessitates innovation in reaching diverse customer niches.

Competitors

• Key players in various sectors (e.g., banks, technology companies)

• Competitive Edge: Identifying how to maintain it against similar organizations in the market.

Suppliers

• Importance of supply chains and managing diverse suppliers for production inputs

• Example: A steel mill's reliance on multiple supplier categories (iron ore, energy, etc.)

• Supply Chain Significance: Crucial for organizational success.

Labour Market

• Factors influencing labour market

  • Growing demand for skilled workers, particularly in technology

  • Continuous investment in recruitment and training people.

• Adaptation to shifting labour dynamics as a result of automation and international trade.

SWOT Analysis

• A tool to analyze the task environment

• Facilitates understanding of an organization's strengths, weaknesses, opportunities, and threats.

The Organisation & The Environment

Environmental Uncertainty

• Managers face incomplete information regarding alternatives and potential future events

• Strategic Issues: External/internal events affecting goal achievement.

Coping Strategies

• Adaptation to changing environments

• Influence surrounding conditions to become more favorable for organizational objectives.

Adapting to the Environment

• Strategies:

  • Boundary-spanning initiatives

  • Forecasting and planning processes

  • Engaging in inter-organizational partnerships

• Examples of collaborations (e.g., Virgin and Mastercard).

Influencing the Environment

• Companies actively shaping their environment through:

  • Marketing, advertising, and public relations strategies

  • Political lobbying and participation in trade associations.