The forces that affect and influence an organization and its strategy

Thèmes abordés

Porter, Michael, forces, influence, stratégie, entreprise, strategies, strategy, organisation, environnement externe

Résumé du document

Managing organizations is a difficult task as the world is becoming increasingly complex. The environment is constantly changing and organizations must have certain strategies for survival and to withstand threats.

Firms are affected by different types of environments with several aspects: The macro-environment, the industrial sector in which the company is operating, and more directly, the competitors, markets and stakeholders surrounding the firm.
Moreover, GA Cole explained in "Strategic Management: Theory and Practice" (1994) that the forces and influences created by the business environment can affect organizational strategies. He claimed that the strategy of firms "involves thinking and actions are focused on the long-term basis of the whole organization that are conducted in conditions of considerable unpredictability" (Cole, 1994). Thus, strategic management can be seen as a circle of decisions which can be affected at any time and at various levels by the business environment. Johnson & Scholes explained in "Exploring strategic management: Text and Cases" (1998) that "strategy is the direction and scope of an organization over the long term: ideally, which matches its resources to its changing environment and in particular, its markets, customers ans clients so as to meet stakeholders' expectations" (Johnson & Scholes, 2005). These definitions suggest that the companies and the managers have to consider an adaptive approach to strategic management, and have to make adequate changes when and where it is necessary. Environmental instability can be fatal for a firm, that is why managers have to be careful at different levels.

In order to have a better approach to these environmental influences, it is preferable for managers and stakeholders to know what forces can be particularly influential for their firms' strategy and therefore how to anticipate future threats and opportunities.

The general environment of a company is much more complex to anticipate and to control as change can appear suddenly from anywhere and because the nature of that change can be hard to understand.

The PESTEL framework can be a solution for organizations as it helps them to analyze the potential forces and factors that can have an impact on their strategies.

Extraits

[...] (2008)) However, there are also some good reasons for using Porter's framework. Firstly, its well designed structure presents a general and easy to understand for an organisation's strategy. Firms using his framework will perform better than companies that do not. Secondly, the feasibility of the model will allow firms in a specific industry to compare themselves with each other in a straightforward process. (See appendix Moreover, the model can analyse any type of industry by its simplicity. And consequently, organizations will more easily reach conclusions about their performance and competitive advantage. [...]

[...] Thus, the analysis of the potential forces that can have an impact on organizations' strategies can be made, for example, by the PESTEL framework, scenarios planning, or the well known “five forces framework” of Michael Porter. Even though these frameworks are very helpful for managers, many authors believe that the reality is much more complex, and that these models are often too simplistic. In order to conclude, we can highlight the fact that a dynamic environment will ask firms to constantly respond to unpredictable challenges by reconsidering their current strategies. [...]

[...] ] essential to effective strategic positioning. Defending against the competitive forces and shaping them in a company's favour are crucial to strategy.” (Porter, M. (2008) pp.80) Porter developed in 1979 a five forces framework that helps managers to identify and assess the attractiveness of a specific industry in terms of competitive forces. (See appendix 2 & Thus, these five forces, which are considered as the determinants of an industry's competitiveness, are: the threat of new entrants, the pressure from substitute products, the bargaining power of buyers, the bargaining power of suppliers and the competitive rivalry. [...]

[...] Looking at a more immediate level of an organisation's environment, we can see that stakeholders can have important influences over firms' strategy. (See appendix Indeed, firms have to respond to stakeholders' pressures, and this is especially the case for large organizations. (See appendix 7 & The external stakeholders can be divided into three different groups: the economic stakeholders (suppliers, competitors . the socio/political stakeholders (government agencies, policy makers . ) and the technological stakeholders (standard agencies, owners of certain technologies . [...]

[...] (2008) The Influence of Stakeholders on the Environmental Strategy of Services Firms: The moderating Effects of Complexity, Uncertainty and Munificence, British Journal of Management, Vol 185–203 Suutari, R. (1993) The Case for Strategic Thinking, CMA, June pp.17 Thompson, M. (2009) How Strategy Shapes Structure, Harvard Business Review, September 2009, pp.73-80 Internet sources PESTEL analysis of the macro-environment (2007) Oxford University Press, [Online] Available at: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_1 2.htm [Accessed on 24th February 2010] Recklies, D. [...]