Transcript ENVIRONMENT AND STRATEGY

ORGANIZATION AND
ENVIRONMENT
Trouble at Amana
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In 1967, Amana introduced the first
microwave, and gained 60% of the market. A
decade later, its market share declined to 6%.
WHY?
Mis-forecast: microwave will SUBSTITUTE for
traditional ways of cooking
Misunderstood the market: assumed that the
market DOESN’T care about the price
Unprepared for new entrants: Low priced
Japanese competitors
In 1990s: The Increase of Gas
Price
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Tesla Motors’s plan:
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Produce battery in Thái Lan, transport
to England to assembly, and sell the
cars in US. But now, they produce
battery in California.
GM:
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Past several years, SVU and mini-truck
were well sold in China. Now, people
are looking for more economy cars.
How Gaz Price Affect Strategies
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Reconsidering global strategy
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Global strategy suggests that firms can
make different components in different
countries.
High gaz price means that transportation
would be very expensive
Reconsiderting values of the product
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Gaz consumption becomes a crital factor
How Current Recession Affect
Business
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Falling stock and slumping dividends
Credit impairment and bankruptcy
Employee lay-offs and benefit cut
Cut to quality
Reduce consumer access
Small firms would be more vulnerable to
the recession
Environment Factors
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… are those that have impacts on the
organizational performance but are
not directly controlled by the
organization
ENVIRONMENT AND STRATEGY
Political
Social
ORGANIZATIONAL PERFORMANCE
Macroenvironment – PEST
Political
• Government stability
• Taxation policy
• Foreign trade
regulations
• Social welfare
policies
• Legal framework
Economic
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Business cycles
GNP trends
Interest rates
Money supply
Inflation
Unemployment
Disposable income
Political Factors: Example
Ranking On “Easy To Do Business”
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Rank 155 countries
Based on various indicators
Surveys law firms/ organizations
Which indicators make up the
ranking?
Starting a business
• Procedures, time, cost and minimum capital to open a new
business
Dealing with licenses
• Procedures, time and cost of business inspections and
licensing (construction industry)
Hiring and firing workers
• Difficulty of hiring index, rigidity of hours of index, difficulty of
firing index, hiring cost and firing cost
Registering property
• Procedures, time and cost to register commercial real estate
Getting credit
• Strength of legal rights index, depth of credit information
index
Which indicators make up the
ranking? (con.)
Protecting investors
• Indices on the extent of disclosure, extent of director liability
and ease of shareholder suits
Paying taxes
• Number of taxes paid, hours per year spent preparing tax
returns and total tax payable as share of gross profit
Trading across borders
• Number of documents, number of signatures and time
necessary to export and import
Enforcing contracts
• Procedures, time and cost to enforce a debt contract
Closing a business
• Time and cost to close down a business, and recovery rate
IFC Rank Countries on “Easy to do
Business”, 2005
2005
1. New Zeala
2. Singapore
3. U.S.A.
7. Hong Kong
10. Japan
20. Thailand
21. Malaysia
27. Korea
35. Taiwan
91. China
99. Vietnam
114. Philippines
115. Indonesia
116. India
2006
1. Singapore
2. New Zealand
3. U.S.A.
5. Hong Kon
11. Japan
18. Thailand
23. Korea
25. Malaysia
47. Taiwan
93. China
104.Vietnam
126. Philippines
134. India
135. Indonesia
WB’s Ranking on Corruption 2006
2. New Zealand
5. Singapore
16. Hong Kong
24. Japan
35. Taiwan
39. Malaysia
47. South Korea
64. Thailand
71. China
90. India
102. Philippines
102. Vietnam
133. Indonesia
The Political Environment Map
High corruption
Indonesia
Philippines
Vietnam
India
China
Easy
Difficult
Thailand
SK
Malaysia
Taiwan
Japan
NZ
HK
Singapore
Low corruption
Macroenvironment – PEST
Socio-cultural
Technological
Population demographics
Income distribution
Social mobility
Lifestyle changes
Attitudes to work and
leisure
• Consumerism
• Levels of education
• Government spending on
research
• Government and industry
focus on technological effort
• New discoveries
/developments
• Speed of technology
transfer
• Rates of obsolescence
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2015: Failing of Oil Price
2014: >$110
 June 2015: $60
 Jan. 2016: < $30
Who are winners and losers?
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Video: Fake Products in China
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What impacts do counterfeiting products
have on: a) Chinese economy (short and
long term)? b) Real products (Chinese and
other countries”)? Consumers?
Why is it so hard to stop counterfeiting in
China (using PEST model)?
What should managers (Chinese and
foreign) do to protect their real products
under this situation?