Week 2 Flashcards
What are the sectors of the external environment?
Political
Economic
Sociocultural
Technological
Ecological
Legal
What is PESTEL framework?
PESTEL is a framework that categorises and analyses an important set of external factors that might impinge upon the strategy, decisions, and activities of a firm
These factors can create both opportunities and threats for the firm
The purpose of PESTEL framework?
Is to scan, monitor and evaluate the important external factors and trends that might impinge upon a firm’s strategy
PESTEL analysis - Political?
Process and actions of the government bodies that influence the decisions and actions of firms
PESTEL analysis - Legal?
Legal factors include the official outcomes of political processes as manifested in law mandated, regulations, and court decisions that may have a direct bearing on the company’s profit potential
PESTEL analysis - Economic
Macro - economic factors including growth rates, level of employment, interest rates, price stability, and currency exchange rates
PESTEL analysis - Sociocultural
Sociocultural factors capture society’s cultures, norms and values
PESTEL analysis - Ecological?
Ecological factors involve broad environmental issues such as climate change and sustainable economic growth
PESTEL analysis - Technological
Technological factors capture the application of knowledge to create new processes and products
What are predictable surprises?
Most of the unexpected events that buffet companies should have been anticipated are predictable surprises
Predictable surprises arise from failures of?
Recognition- mangers remain oblivious to and emergent threat or opportunity
Prioritisation - threats are recognised but are not given high enough priority
Mobilisation - threats are recognised and taken seriously but there is failure to respond
What is Scenario planning?
A technique for rehearsing the future to avoid surprises by breaking through the ‘illusion of certainty’ associated with forecasting
A technique for envisioning multiple alternative futures based on assessment of critical uncertainties-
e.g conducting research to understand the major forces moving the world in different directions
