1.5 External Environment 1.6 Organizational Planning Tools PEST(LE) SWOT Boston Matrix Ansoff Matrix Porter Five Forces

Planning Tools PEST(LE) Analysis Operational environment, opportunities and threats Big picture SWOT analysis Strengths and Weaknesses are internal Opportunities and Threats are external Boston Matrix Looks at market growth and market share for products and business units Ansoff Matrix Help with product and market growth strategy Porter Five Forces Looks at the competition

PEST Analysis a tool for understanding the “big picture” What is the environment in which you are operating? See opportunities and threats that lie within it. Then can take advantage of the opportunities and minimize the threats.

PEST (LE) a mnemonic for Political, Economic, Social, Technological, (Legal, Environment) used to brainstorm the characteristics of a country or region draw conclusions as to the significant forces of change operating within it. provides the context within which more detailed planning can take place To take advantage of the opportunities that present themselves at any point in time

aka STEEPLE Social, Technological, Economic, Environment, Political, Legal, Ethics

PESTLE analysis Political factors, or how and to what degree a government intervenes in the economy. tax policy, environmental law, trade restrictions, tariffs, and political stability. Provision of merit goods and restriction of demerit goods Economic factors GDP, interest rates, exchange rates and the inflation rate. Social factors Culture, Health, Population growth rate; demographic trends Technological factors Innovation and R&D activity; automation; barriers to entry Legal factors Discrimination; consumer law; antitrust law;employment law; health and safety law Environmental factors weather, climate, and climate change Pollution and related costs Ethical considerations (for steeple analysis)

Political Government type and stability Freedom of press, rule of law and levels of bureaucracy and corruption Regulation and de-regulation trends Social and employment legislation Tax policy, and trade and tariff controls Environmental and consumer- protection legislation Social/Cultural Population growth rate and age profile, health, education and social mobility Employment patterns, job market freedom and attitudes to work Press attitudes, public opinion, social attitudes and social taboos Lifestyle choices and attitudes Lifestyle choices and attitudes Socio-Cultural changes Socio-Cultural changes Economic Business cycle GDP growth, inflation and interest rates Unemployment and labor supply/costs Disposable income and income distribution Impact of globalization Likely impact of technological or other change on the economy Technological Technological Emerging technologies Emerging technologies Net 2.0, viral marketing, reduction in communications costs Increased remote working Research and Development Impact of technology transfer

SWOT Analysis Internal External

Boston Matrix

Ansoff Matrix

Porter’s Five Forces A tool for understanding where power lies in a business situation. it helps you understand the strength of your current competitive position the strength of a position you're looking to move into

Porters Five Forces Supplier Power How easy is it for suppliers to drive up prices? Buyer Power How easy is it for buyers to drive prices down? Competitive Rivalry the number and capability of your competitors if you have many competitors, and they offer equally attractive products and services, then you’ll most likely have little power in the situation. If suppliers and buyers don’t get a good deal from you, they’ll go elsewhere. On the other hand, if no-one else can do what you do, then you can often have tremendous strength. Threat of Substitution the ability of your customers to find a different way of doing what you do If substitution is easy and substitution is viable, then this weakens your power. Threat of New Entry the ability of other business persons to enter your market. I f it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

Porter’s Five Forces Example: Should we buy a farm?