Chapter 4

Question 1

4.1: Identify the difference between environmental, technological and human influence on strategic thinking.

Answer 1

Environmental influence will require the strategic thinker to consider the use of natural and other resources in the
strategy being developed. Thinking is likely to be influenced by corporate social responsibility (CSR) expectations.

Technological influence requires the strategic thinker to ensure firstly that the strategic plan is making use of known
technology, but secondly that the plan is adaptable enough to allow for current areas of technological development such
as artificial intelligence (AI).

Human influence requires the strategic thinker to be aware of the influence of individual behaviour, the impact of
teamwork and the overall culture of their organisation; on the basis that any organisation is only ever a collection of
human beings.

Question 2

4.2: Discuss briefly the impact of each of the factors of a PESTEL analysis

Answer 2

• Political factors recognise the impact of the decision of government(s) on the organisation.
• Economic factors consider the ‘macro’ impact on quantitative measures within the organisation, such as interest
  rates and exchange rates.
• Socio-cultural factors require the strategic thinker to consider megatrends, such as increased human longevity, or
  wealth distribution.
• Technological factors, and the continuing changing world of automation, requires an organisation to determine
  whether it leads or lags – will it be the first to try innovative technology, or will it wait until that technology is tried and
  tested.
• Environmental factors will help an organisation to consider not just its own sustainability, but also the stewardship
  of the wider environment within which the organisation operates.
• Legal factors require an organisation to understand the breadth and depth of the legislation pertaining to its
  operational environment, but also to consider the underlying legal trends, such as an increased focus on the
  personal accountability of leaders.

Question 3

4.3: Suggest briefly why it is important to consider, at an early stage of the development of strategy, the position of an
organisation on the economics dynamic.

Answer 3

Strategic planning requires an understanding of where an organisation sits in comparison to its competition. If it is at the
monopolistic end of the economics dynamic it will be able to influence or ‘make’ prices. If it is at the perfect competition end, it will be a ‘price taker’. Most organisations, or rather their products or services, are somewhere along the dynamic. It is important for the strategic planner to recognise where the product or service currently sits and which direction it is
moving in.

Question 4

4.4: Write one short question that you could use with an organisation to identify the impact of each of Porter’s five forces.

Answer 4

• Competition: where is your organisation currently placed – price maker or price taker?
• Suppliers: how reliant are you on one or more suppliers – who holds the power?
• Customers: does your customer have a choice of supplier, or are you core to their success?
• Entrants: who might be able to take some, or all, of your market share?
• Products: what might a customer or consumer use instead of your product?