COMP 3357 Competition Business Environment Richard Henson University
COMP 3357 Competition & Business Environment Richard Henson University of Worcester April 2017
Objectives List most popular tools used to analyse the macro environment and micro (i. e. internal & immediately external environment) n Explain PEST and PESTLE and the information they provide n Explain SWOT analysis and its value to the business n 2
External Matters n Anything outside the organisation’s “system boundary” Øcould be business partners Øcould be government n The partnership with another entity will be in the context of sharing data for mutual benefit
Economic Environment n The financial system in which the business is having to function ØLocal/regional factors (micro-) ØNational factors (macro-) n These factors can combine to encourage or discourage business growth
Macro-economic Environment n Dependent on government-controlled factors like: ØGovernment business growth funds Øbank interest rates Øincome tax levels ØVAT levels Øcorporation tax levels
Micro-economic Environment n Factors that effect the local/regional economy: ØCouncil tax rates ØLocal Enterprise Partnership business growth funds ØLocal council projects
Business and Society People buy products n People will buy (or not buy) for a complicated series of reasons. . n Examples (in pairs…) n 7
Reasons to Buy… ØPeer pressure? ØPrice? ØExpert recommendations? ØLabour-saving? ØImage of product? ØEthics of conditions creating the product
Business Environment Analysis… n Macro environmental factors (PEST): ØPolitical ØEconomic ØSocial ØTechnological n All effect the ability of a business to perform well… 9
Extending “PEST”. . . n Two other factors… Ølegal Øethical n PESTLE 10
A third macro-environmental breakdown of factors n SLEPT ØPEST plus Legal Øleaves out ethical (!) n What do you think about this!? 11
Interactions between factors n To complicate matters further… Øthese factors all affect each other n e. g. Technology Øaffects economics & social habits Øeffect on politicians because of public opinion 12
Political Response to public opinion? n Usually respond by Øchanging existing laws/regulations or Øbringing in new ones… n Legal response to information technology advances etc… ØUK government approach… “hands off” Øleave it to market forces) 13
Laws, Regulations, and Information Technology n Passing effective laws takes a lot of consultation etc… ØTechnology moving forward quickly (especially IT) Øfalling behind? GDPR an effort to catch up? 14
Information Technology and Social/Socio-cultural matters n Strategic issues involving the use of the online business environment… ØLegal/ethical » security of suppliers, partners, customers’ data ØSocial » acceptability of new technologies e. g. direct sales online, and email 15
Social/age-based exclusion (no computer; not computerliterate; choice) Legal – data protection, computer misuse… conventional laws, across national boundaries… n Ethical – use of cookies, etc. to target marketing n How these affect business direction. . . n 16
SWOT Analysis (internally focussed factors…) n Strengths n Weaknesses n Opportunities n Threats 17
Why SWOT? n Despite “business planning”… Øcorporate initiatives don’t always go as planned! Ømore effective analysis required n SWOT developed by an academic… became popular in the 1970 s ØTypically presented as a 2 x 2 matrix… 18
SWOT Matrix 19
20
Competition n Basic principle of business Øcustomer can choose from a range of products in a number of businesses n Competitive Forces (what drives competition? ) Østudied by academics (e. g. Porter) » wrote an International best seller about what he saw as 5 competitive forces
Porters 5 Forces Existing competitive rivalry between suppliers n Threat of new market entrants n Bargaining power of buyers n Power of suppliers n Threat of substitute products (including technology change) n 22
Co-opetition n Competitor businesses working together towards a common goal Ømore scope for this with e-business Øshare data Ømake supply chain more efficient? Øcommon specialised e-marketplaces n Porter’s 6 th Force…? 23
E-business Systems to transform business e- Business 2. 0 n payment systems n e-procurement n e- SCM n e-marketing n e-Retail, e-CRM n
Thanks for listening… Think about factors affecting business competition in the online environment… n We’ll cover them in more depth after Easter n
- Slides: 25