University of Zululand
Faculty of Commerce, Administration and Law
Department of Business Management
Assignment topic: Chapter Two summary
Name: Mr T Mdletshe
Student number: 200903233
Module code: CBM 503
Module Description: Advanced Aspects of Management
The environment is what gives their means of survival. It creates opportunities and its present threats. This chapter therefore provides frameworks for analysing changing and complex environments. These frameworks are organised in a series of ‘layers’. Within the environment there is Macro-environment, this is the highest-level layer that consist of broad environmental factors that impact to a greater or lesser extent on ...view middle of the document...
Typical key drivers will vary by industry of sector.
2.2. Building scenarios
When the business environment has high levels of uncertainty arising from either complexity or rapid change (or both), it is impossible to develop a single view of how environmental influences might affect an organisation’s strategies – indeed it will be dangerous to do so. Scenario analyses are carried out to allow for different possibilities and help prevent managers from closing their minds about the alternatives.
Scenario analyses can be carried out as follows:
* Identifying the scope is an important first step. Scope refers to the subject of the scenario analyses and the time span.
* Identifying key drivers for a change comes next. Here PESTEL analysis can be used to uncover issues likely to have a major impact upon the future of the industry, region or market.
* Selecting opposing key drivers is crucial in order to generate a range of different but plausible scenarios
* Developing scenario ‘stories’: as in films, scenarios are basically stories. Having selected opposing key drivers for change, it is necessary to knit together plausible ‘stories’ that incorporate both key drivers and other factors into a coherent whole.
* Identifying impacts of alternative scenarios on organisations is the final of scenario building.
2. INDUSTRIES AND SECTORS
An important aspect of this for most be competition within the industry, sector or market. An industry is a group of firms producing products and services that are essentially the same. A market is a group of customers for specific products or services that are essentially the same (for example, a particular geographical market)
This section concentrates on industry analysis, starting with Michael Porter’s five forces framework and introducing techniques for analysing the dynamics of industries.
3.3. Competitive forces – five forces framework
Porters’ five forces framework helps to identify the attractiveness of an industry in terms of five competitive forces: the threat of entry, the treat of substitutes, the power of buyers, the power of suppliers and extent of rivalry between competitors.
3.4.1. The threat of entry
Barriers to entry are the factors that need to be overcome by new entrants if they are to compete in an industry. Typical barriers are as follows:
* Scale and experience in some industries, economies of scale are extremely important
* Access to supply or distribution channels in many industries manufacturers have had control over supply or distribution channels. Sometimes this has been through direct ownership (vertical integration)
* Expected retaliation if an organisation considering entering an industry believes that the retaliation of an existing firm will be so great as to prevent entry or mean that entry would be so costly.
* Legislation or government action legal restraints on new entry vary from patent protection, to regulation of markets and through...