Transcript PRESENTATION IN CORPORATE STRATEGY

PRESENTATION
IN
CORPORATE
STRATEGY
Corporate strategy
06/07/2006
CORPORATE
STRATEGY
THE CORPORTE Environment:
Content
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The company’s micro-environment
The company: employees, management, shareholders, BOD.
Suppliers
Marketing intermediaries: distributors, media, banks.
Customers
Competitors
Pressure groups
Competitors
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The company’s macro-environment
Political
Economic
Social
Technological
Ecological
Legal
Marketing Environment:
LEARNING OBJECTIVES
By the end of this module you should be able to:
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Explain the meaning of the business environment.
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Describe the environmental forces that affect the company’s ability to serve its
customers.
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Explain how changes in the demographic and economic environments affect
business decisions.
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Identify the main trends in the firm’s natural and technological environments
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Explain the key changes that occur in the political and cultural environments.
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Discuss how companies can react to the marketing environment.
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Recognise the importance of building relationships with relevant stakeholders.
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Identify and interpret the business implications of significant changes in an
organization's wider environment.
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Understand the complex, dynamic and uncertain nature of the external
environment and how it might be best managed in marketing terms.
The Corporate environment
DEFINITION
The factors that affect business ability to develop
and maintain successful relationships with its
target customers
THE CORPORATE ENVIRONMENT/ BUSINESS ENVIRONMENT
MACRO ENVIRONMENT
Political
Government policies
Rules and regulations
Laws, taxes, political
stability/instability,regime in government
MICRO
ENVIRONMENT
Company
Departments: e.g. Financial, marketing, HR,
Production etc.
•Management/Board of directors
•Shareholders
•Employees
Financial Intermediaries
Customers Social
THE COMPANY
Banks
Economic Credit Institutions
AND ITS
Demographic
Social Class
Inflation,
Building Societies
ENVIRONMENT
Reference
Employment,
Insurance companies
GDP,GNP,NI,
Local community groups
Marketing Intermediaries
Health
Unemployment,
Pressure
Education
wages,
Suppliers
Communicati
Interest rates,
groups
Distributors/transporters
on
Tax,
Think-tank consultancy
Culture
deflation,
Media
Law firm
Ecological
trade cycle,
Retailers
exchange
Polusion
Wholesalers
rates,
Climate change
Competitors:Direct and
Energy prices
Scarcity of oil
Agents/brokers
economic
Indirect.
Natural disasters
growth
Income,
competitors
Per Capita
Technological
Recycling
Legal
Internet, digital, ATM
EPSS, mobile, SMS,
Polusion law ,Alcohol law,consumer
protection law
Employment law, product safety law
Human rights law, Business law
THE MICRO ENVIRONMENT
DEFINITION
The forces close to the company that affect its ability
to serve its customers – the company, market channel
firms, customer markets, competitors, marketing
intermediaries, supplies, which combine to make up
the firm’s value delivery system.
THE MICRO ENVIRONMENT:
MICRO
ENVIRONMENT
Company
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Management/BOD
Shareholders
Employees
Departments: Finance, human
resource, marketing,
production.
Financial Intermediaries
Banks
THE COMPANY
Credit Institutions
AND ITS
Building Societies
Insurance companies ENVIRONMENT
Customers
Local community
Marketing Intermediaries
Pressure
Suppliers
groups
Distributors/transportersThink-tank consultancy
Media
Law firm
Retailers
Wholesalers
Agents/brokers
Publics
NB: Financial intermediary is still part of the marketing intermediary
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Jude
PRINCIPAL ACTORS IN THE COMPANY’S
MICRO ENVIRONMENT
Company
Suppliers
Marketing
intermediar
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Customers
Competitors
Publics
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THE MACRO ENVIRONMENT
DEFINITION
The larger societal forces that affect the
Whole microenvironment – Political,
economic, social, technological, ecological
and legal factors
THE MACRO MARKETING ENVIRONMENT
Political
Economic
Government policies
Rules and regulations
Laws, taxes, political
stability/instability,regime in
government
Inflation,
Employment,
GDP,GNP,NI,
Unemployment,
wages,
Interest rates,
Tax,
MACRO
deflation,
ENVIRONMENTAL
trade cycle,
FACTORS
exchange
rates,
Energy prices
economic growth
Per Capita Income,
competitors
Legal
Social
Demographic
Social Class
Reference
groups
Health
Education
Communicatio
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Ecological
Culture
Polusion
Climate change
Scarcity of oil
Natural disasters
Technological
Recycling
Polusion
law
,Alcohol
law,consumer
Internet, digital, ATM
APSS, mobile, SMS, protection law
Employment law, product safety
law
Human rights law, Business law
Political uncertainties/instability: E.g. in the middle east,
in Iraq, Afghanistan etc. This can seriously disrupt
businesses and economic activities. Business will hardly
survive in such politically unstable regions and countries.
Government regulations and policies: e.g. alcohol and
cigarette advertising regulations, policy on environment ,
prices, employment etc
•Legislative structure- they regulate businesses: This
includes all the laws which the government use to control
businesses. This will be fully examined under the legal
environment.
•Monopoly restrictions: Government may pass laws to
control monopolists for the interest of the public
• Political and government stability: The more stable a
country is politically, the more investment can take
place.
• Political orientations: different political parties and their
different political and economic policies.
• Taxation policies: Government policy towards taxes:
Some governments favour high taxes while others
favour low taxes. This is true for some political parties
who may favour tax increases and other may favour
low taxes.
• Employment legislation: Government pass employment
laws when it comes to recruitment and selection of
staff, equal opportunities, contract laws, redundancy
laws, wage laws etc to control businesses.
• Foreign trade regulations: Government may regulate
international trade especially imports of certain kinds of
products for the interest of home infant industries.
• Environmental protection
legislation: Governments of most
countries pass environmental
protection laws to protect the
environment against pollution.
Pollution law is being passed by
governments to curb the rate of
pollution, recycling laws are being
passed by some governments for
the above purpose.
• Interest rate control: Government
controls the rate of interest to
regulate the value of a currency
and to control inflation.
• Price control: Government implement price
controls to protect customers from business
exploitation and to regulate the economy
especially during an inflationary situation.
Prices for houses, electricity, gas, and other
products may be controlled by the government
to prevent customers from exploitation
especially from the private sector as a result of
competition.
• Growth of public interest groups: There is the
growth of public interest groups who now are
part of the government body formed to fight for
the rights of the consumers and also some are
fighting to protect the environment: Food
standard Agency for instance is fighting to
protect customers from consuming protects
that may damage their health.
• Increased emphasis on ethics and
socially responsible actions: There is
now an increase in the emphasis on
ethics and socially responsible actions
by governments. Government is
putting pressure on most companies to
be ethically responsible and to provide
goods and services under social and
environmentally friendly conditions.
ANALYSIS OF THE MACRO ENVIRONMENT
ECONOMIC
Employment/unemployment: The higher the
unemployment rate, the lower the demand and this
has an effect on businesses.
Inflation/deflation rates: Inflation is the persistent
and continuous rise in the prices of goods and services.
The inflation rate affects the value of a currency and
this can seriously affect demand, and will eventually
affect business. For example in Zimbabwe the inflation
rate is almost a 1000% and this has seriously affected
demand, production and the value of the currency. It
also has scared foreign investors. Therefore as a
businesses, it is necessary to investigate the inflation
rates of different countries because they affect the
demand and production of goods and services.
ANALYSIS OF THE MACRO ENVIRONMENT
ECONOMIC
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Government economic objectives:
NI,GDP,&GNP trends
The Business /trade Cycle
BOP & BOT
Exchange rate
The impact of international trade
Interest rate
Prices
Competition
Demand
Money supply
Investment rates
Investment levels
Energy costs
Patterns of ownership
Economic stability/instability
Exchange rate
Income distribution and changes in purchasing power
Changing consumer spending pattern.
Economic growth and development
Social analysis
1. Demographics: population size and growth trends,
changing age structure of the population, the
changing family, pressures for migration, rising
number of educated people, & increasing diversity
2. Lifestyles
3. Education levels
4. Attitudes
5. Consumerism
6. Health
7. Reference groups
8. Culture – persistence of cultural values, shift in
secondary cultural values( people’s views of
themselves, people’s view of others, peoples views of
organisations, peoples view of society, people’s view
of nature, people’s view of the universe)
SOCIAL
ANALYSIS OF THE MACRO ENVIRONMENT
Demographic:
This is the study of the composition of a
country’s population in terms of age,
gender, sex, occupation.
•Population
•Age composition
•Gender composition
•Marital status and household structure
•Income
•Migration: Immigration & Emigration (Net
migration)
•Birth rate & Death rate
•Fertility rate.
•Trends in population
• World population
• Aggregate population
• Population structure
• Regional distribution of population
• Ethnic groups
• Occupational structure
• The workforce in employment: some
important trends
• The changing role of women in work
and society
SOCIAL
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Social class
Culture
Reference groups
The family
Lifestyle
Education
Health
Communication
demographic factors such as:
population size and distribution
age distribution
education levels
income levels
ethnic origins
religious affiliations
Gender composition.
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•JudeAsongwe
ANALYSIS OF THE MACRO ENVIRONMENT
TECHNOLOGICAL environment
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New technologies : Digital, Internet.
The importance of New technology.
Communication
efficiency of infrastructure, including: roads,
ports, airports, rolling stock, hospitals,
education, healthcare, communication, etc.
industrial productivity
new manufacturing processes
new products and services of competitors
new products and services of supply chain
partners
any new technology that could impact the
company
cost and accessibility of electrical power
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Fast pace of technological change
ANALYSIS OF THE MACRO ENVIRONMENT
ECOLOGICAL
• Scarcity of resources e.g. petrol
• Over dependence on oil (petrol)
• Environmental pollution
• Climate change
• Natural disasters e.g. earthquakes,
• hurricane, Tsunami, floods
etc
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ANALYSIS OF THE MACRO ENVIRONMENT
LEGAL ENVIRONMENT
• This deals with Legislation imposed by governments
• The legal framework is made up of laws imposed by
government of a particular country or region to control
business and economic activities. Examples of laws can
be seen below;
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Fair trading laws
Laws Protecting the consumer
minimum wage laws
environmental protection laws
worker safety laws : Health and safety laws
Trade union laws
copyright and patent laws
anti- monopoly laws
• Sunday closing laws
• municipal licences
• laws that favour business investment
• Equal opportunity law.
• Marketing laws: advertising laws.
• Immigration laws
• Production and consumption laws : e.g.
law on alcohol production and
consumption, laws controlling or even
banning smoking in public places.
The aim of imposing laws is to control
business and economic activities, to
protect customers from business
exploitation, to prevent unfair trading,
to protect the health of customers, to
encourage the production, distribution
and consumption of goods under social
and environmentally friendly conditions.
The above laws have Implications to the
marketer.
• As a marketer, an entrepreneur or a
business; it is wise enough to always
• Monitor these various legislations and
respect them because of far reaching
• Consequences which may arise as a
result of total neglect.
Social environment
DIFFERENCES IN CULTURE
• What is culture?
Culture is sum total of belief, rituals, custom,
tradition, norms etc that characterizes a
particular group of people, society, or
organization.
• The sum total of learned beliefs, values
and custom that serve to direct
customer behaviour in a particular country
market
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Differences in culture:
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There exist cultural differences in different
continents across the world with respect to
the following:
1. Language: People speak different languages
e.g. English, Chinese, Malaysian, Russian,
Polish etc
2. Norms
3. Values
4. Rituals
5. Custom and tradition also differs in different
culture:
In Most Muslim countries, Pork, alcohol and other
products are not consumed because of their
cultural and
 What may be consumed in one part of the
world, may not be consumed in another.
 What may be preferred by one country, may
not be preferred by another.
 The business language used in one country
may be different from another
 The way people behave in one country may
be different from another
 The kind of cars people prefer may vary in
different countries
 Values, norms and rituals vary across the
world.
 Therefore, it is vital for marketers and
businesses to study the customer market and
examine the cultural composition and
differences and try to produce goods to suit
Green Marketing
This is concerned with the marketing of products
under social and environmentally friendly
conditions:
Ethics
• Ethics (from the Ancient Greek ἠθικός or "ethikos" meaning
"Theory of living") is one of the five major branches of philosophy,
which attempts to understand the nature of morality; to
distinguish that which is right from that which is wrong. The
Western tradition of ethics is sometimes called moral philosophy.
Ethics in plain words means studying and analyzing right from
wrong; good from bad.
• Business ethics is a form of applied ethics that examines ethical rules
and principles within a commercial context; the various moral or ethical
problems that can arise in a business setting; and any special duties or
obligations that apply to persons who are engaged in commerce.”
Generally speaking, business ethics is a normative discipline, whereby
particular ethical standards are advocated and then applied. It makes
specific judgements about what is right or wrong, which is to say, it
makes claims about what ought to be done or what ought not to be done.
While there are some exceptions, business ethicists are usually less
concerned with the foundations of ethics (metaethics), or with justifying
the most basic ethical principles, and are more concerned with practical
problems and applications, and any specific duties that might apply to
Marketing ethics
• Marketing ethics deals with the moral principles which
marketers should follow: These principles determine what is
right from what is wrong.
• Marketing which goes beyond the mere provision of information
about (and access to) a product may seek to manipulate our
values and behaviour. To some extent society regards this as
acceptable, but where is the ethical line to be drawn?
• Pricing: price fixing, price discrimination, price skimming.
• Anti-competitive practices: these include but go beyond pricing
tactics to cover issues such as manipulation of loyalty and
supply chains. See: anti-competitive practices, antitrust law.
• Specific marketing strategies: greenwash, bait and switch, shill,
viral marketing, spam (electronic), pyramid scheme, planned
obsolescence.
• Content of advertisements: attack ads, subliminal messages,
sex in advertising.
• Children and marketing: marketing in schools.
• Black markets, grey markets.
Advertising regulations and
ethics.
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Advertising regulation refers to the laws and rules defining the ways in which
products can be advertised in a particular region. Rules can define a wide number of
different aspects, such as placement, timing, and content. In the United States, false
advertising and health-related ads are regulated the most. Many communities have their
own rules, particularly for outdoor advertising. Sweden prohibits domestic advertising
that targets children. Some European countries don’t allow sponsorship of children’s
programs, no advertisement can be aimed at children under the age of twelve, and
there can be no advertisements five minutes before or after a children’s program is
aired. In the United Kingdom advertising of tobacco on television, billboards or at
sporting events is banned.
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It is also prohibited to advertise cars on the basis of how fast they can go and the
relationship which the event has with the sport seen as a healthy pursuit, unlike
smoking. Similarly alcohol advertisers in the United Kingdom are not allowed to discuss
in a campaign the relative benefits of drinking, in most instances therefore choosing to
focus around the brand image and associative benefits instead of those aligned with
consumption. There are many regulations throughout Europe as well. In many nonWestern countries, a wide-variety of linguistic (Bhatia 2000, pp. 217-218) and nonlinguistic strategies (e.g. religion; Bhatia 2000, pp 280-282) are used to mock and
undermine regulations.
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Two of the most highly regulated forms of advertising are tobacco advertising and
alcohol advertising.
In the UK, advertising regulation is governed by the Advertising Standards Authority. In
the United States, the Federal Trade Commission is the highest authority on the subject.
States and more local political divisions can have their own laws on the subject.
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The quality Movement
Quality circus:
This is an association of workers in a particular organisation who decide to unite in
order
to find solutions to the quality problems facing the organisation. This is very
important in
organanistions because these groups play a key role in helping the company sort
out
some of its problems:
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Quality
and
customers
Quality is very vital in so far as the market is concerned. Poor
quality products can affect the health of customers.
It is the responsibility of businesses to make sure the products
there are producing is safe for customers.
Customers are becoming more and more concerned with what
they eat. --- there have been an increase in the amount of quality
conscious customers because of health reasons.
The government is also doing much work to protect the health of
consumers by sensitising people about the dangers of junk food.
The Food standards agency, the International organisation for
standardisation (ISO) and other non-governmental organisations
and pressure groups are putting pressure on companies to produce
healthy products for their customers.
• Businesses should aim at delivering quality for
their customers.
• The higher the quality the higher the price and
the lower the quality the lower the price
therefore businesses should try to provide
value for money for its customers. To provide
high quality also cost money so many
businesses cover up the cost involved in
proving quality by charging high price. The
price charge for products should be reasonable
enough and should also be affordable.
• Most fast food outlets and restaurants e.g.
Nnados, KFC, Burger King, McDonalds etc are
now seeing the importance of providing healthy
options such as salads and vegetables because
of the growing concern about the health related
risk of consuming junk food. The government is
also putting pressure on caterers to provide
healthy options for customers.
• Therefore the production and
distribution of goods should be done
under a health environment. If the
input is unhealthy, then the output will
likely be unhealthy.
Corporate strategy
06/07/2006
Key terms and definitions
Marketing environment: The actors and forces that affect marketing
management’s ability to develop and maintain successful relationships
with its target customers.
Cultural Environment: Institutions and other forces that affect society’s
basic values, perceptions, preferences and behaviours.
Political Environment: Laws, government agencies and pressure groups
that influence and limit various organisations and individuals in a given
society.
Technological Environment: Forces that create new technologies, creating
new product and market opportunities:
Natural / Ecological environment: Natural resources that are needed as
inputs by marketers or that are affected by marketing activities.
Economic Environment: Factors that affect consumer buying power and
spending patterns.
Demography: The study of human populations in terms of size, density,
location, age, sex, race, occupation and other statistics.
Public: Any group that has an actual or potential interest in or impact on an
organisation’s ability to achieve its objectives.
KEY TERMS AND DEFINITIONS
Suppliers: Firms and individuals that provide the resources needed by
the company and its competitors to produce goods and services.
Marketing Intermediaries: Firms that help the company to promote,
sell and distribute its goods to final buyers; they include physical
distribution firms, marketing –service agencies and financial
intermediaries.
Resellers – The individuals and organisations that buy goods and
services to resell at a profit
Physical distribution firms – Warehouse, transportation, and other
firms that help a company to stock and move goods from their point
of origin to their destinations.
Marketing services agencies – Marketing research firms, advertising
agencies, media firms, marketing consulting firms and other service
providers that help a company to target and promote its products to
the right markets.
Financial Intermediaries – Banks, credit companies, insurance
companies and other businesses that help finance transactions or
insure against the risks associated with the buying and selling of
goods.
QUESTIONS FOR REVISION
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Explain how the corporate environmental factors affects
today’s businesses?
How is the study of ethics important to a business?
How can the corporate environment affect businesses and
how can businesses affect the corporate environment?