4.2 Analysing the operational environment

Question 1

Irrespective of the type of organisation that we are considering from a strategic or an operational perspective, it is essential that we consider the breadth and depth of the ___________ within which an organisation exists

Answer 1

environment

Question 2

What three categories of influences impact on a business’ strategy?

Answer 2

Environmental influences - e.g. SCR
Technological influences - e.g. rapid change in technology
Human influences - e.g. human competitiveness

Question 3

There are four levels to the “assessment of data”.

1) Application of meaning
2) Consideration of information
3) Challenge against existing knowledge
4) ____________________________

Answer 3

Restructuring opinions and adjustment of knowledge

Question 4

What are the three stages to a supply chain?

Answer 4

Source
Make
Deliver

Question 5

The biggest single problem with macro thinking faced by the directors of the organisation is the sheer distance of the far ___________, and the seeming lack of ability to influence or control various external forces.

Answer 5

environment

Question 6

What is a “megatrend”?

Answer 6

Significant changes which are slow to form but have significant impact (e.g. aging populations)

Question 7

Changeability is the degree to which the external _______ is likely to change.

Answer 7

environment

Question 8

Predictability is the degree to which changes in the environment can be __________.

Answer 8

predicted

Question 9

PESTEL is an acronym for the analysis of the macro environment. What does PESTEL stand for?

Answer 9

Political
Economic
Socio-cultural
Technological
Environmental
Legal

Question 10

What sociocultural factors need to be considered when developing strategy?

Answer 10

Demographics

Wealth distribution

Question 11

What technological factors need to be considered when developing strategy?

Answer 11

Technology push or market pull
People skill divergence
Diffusion

Question 12

What environmental factors need to be considered when developing strategy?

Answer 12

Sustainability and stewardship
Global warming
Public conscience

Question 13

What legal factors need to be considered when developing strategy?

Answer 13

Labour/employment law
Environmental legislation
Finance, taxation and reporting requirements
Ownership, merger and competition law

Question 14

Johnson (2017) introduced the following methods of forecasting:

• single point forecasting
• range forecasting
• alternative futures forecasting

Summarise these approaches.

Answer 14

Single point - we are able to forecast a single defined outcome
Range - we assign probabilities to a range of possibilities
Alternative futures - we define a number of potential fixed outcomes based on certain known variables.

Question 15

Ringland (2014) established 7 “dimensions” for scenario planning. What were these?

Answer 15

Vital issues
Positive outcome
Negative outcome
Internal systems
Key learnings
Key decisions
Personal dimension

Question 16

Which major banking acquisition in 2000 had a major impact on the UK financial environment?

Answer 16

RBS’ acquisition of NatWest

Question 17

When does a monopoly exist?

Answer 17

Where there is no competitive rivalry.

Question 18

When does an oligopoly exist?

Answer 18

Where there is a high concentration of a defined number of players (e.g the Big Four)

Question 19

When does perfect competition exist?

Answer 19

Where there are many competitors provide similar and largely undifferentiated products and services.

Question 20

What are the four stages of a business’ lifecycle?

Answer 20

Introduction
Growth
Maturity
Decline

Question 21

What are Porter’s (1980) five forces?

Answer 21

Existing competition (today, first force)
Supplier bargaining power (second force)
Customer bargaining power (third force)
Potential new entrants (fourth force)
Substitute products (fifth force)

Question 22

What is meant by “critical mass” in market competition?

Answer 22

Holding a controlling or majority share or influence in any market, product or service.

Question 23

What barriers does Porter identify for new entrants entering a market? (6 things)

Answer 23

1 Economies of scale - must be a degree of certainty of gaining market share
2 Product differentiation - needs a unique selling point
3 Capital requirement - cost of entry
4 Customer persuasion - need to give a reason for change
5 Government policy - legal restraints on competition
6 Organisational strength - retaliation from existing players

Question 24

How do PESTEL analysis and the Five Forces model differ in their approaches?

Answer 24

PESTEL considers wider factor such as economy, social trends etc, whiles Five Forces examines pressures from the near environment more closely (including suppliers, customers etc).

Question 25

Johnson (2017) introduced the concept of market segmentation, which recognises the differences that exist between different groups of _________, and their differing needs, expectations and ways of behaving.

Answer 25

customers