External environment analysis

Published: 2019-11-28 08:00:00
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Scanning of the business environment is significant as it enables the business to determine its future developments and forecast factors likely to influence its success. The information system organization may face various PESTEL issues along its operations. There may be legal restrictions in some countries the organizations operates in which may limit the firm from operating as expected. The regions where the firm operates in are politically stable hence the firm may not have political issues affecting it. The firm has various innovations the technology which have it made it unique in its operations against competitors in the market. There is also the advancement of technology in the world that has contributed to the success of the firm.

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Porters five forces

The Porters five force tool is used to analyze business power in the form of its strength to face competition and to determine how strong it can survive in the environment it is operating in. In this analysis, they are five forces determining the competitive power of the corporation. Supplier bargaining power is one of them. The corporation may have difficulties making purchases from some suppliers because of the money they owe them. It may make the organization keep making purchases from the suppliers even when their prices are higher in the market which may not be advantageous to the company. Buyers power involves determining the ease of buyers in driving prices down. The organization is a competitive information systems industry which means their operations are frequent and it has a big market share in the information systems market. The organization, therefore, has a better hand in bargaining its prices due to its brand loyalty in the market. Since the cooperation is in a competitive market, it has ensured it offers competitive services and it achieves customer satisfaction to enable the company top the rest. Also, threats of substitution which are affected by the ability of customers going for competitors goods and services at the expense of those produced by the corporation is something the management need to analyze in detail. The competitors offer similar and cheaper services or products which may make buyers switch to the competitors. Lastly, entry to new market has its challenges, especially for international corporations. The information systems industry is enlarging each day. The market is receiving new companies hence making it a competitive market to operate in because there are limited restrictions to enter the market as a new firm.

Primary drivers of competitive dynamics

They are the ongoing responses and actions across all businesses competing to earn a more advantageous market position. In every competitive business environment, there is a need for a firm to access these drivers to overcome the hardship experienced while getting into the new market. The awareness which is the extent at competitors recognizes the degree of their joint interdependence resulting from products similarities and market commonality. Motivation is also an important area of interest where it mainly entails the corporations incentives to take action, respond to attacks from competitors and how to relate to perceived gains and losses. Of course, the corporation will aim at making a profit in its new ventures, but it needs to plan the actions it should take once things turn against their wish. The corporations ability to attack its competitors and to respond to attacks demand attention from the business. Other elements the corporation needs to observe include uniqueness, innovation, dynamic capabilities, and the strategic focus on other issues of concern.

Industrial attractiveness analysis

It defines the degree and ease of the corporation making a profit in the midst of all the risks involved in the industrial segment. It is mainly gauged on some competitors, their relative strength, and the rate of growth in demands for services and goods and width of margins. Since the company aims at introducing at least two products in each country, it gives them a chance to analyze the competition before increasing their investment where they will have control of the market. While industrial attractiveness entails the absence of threats exhibited by industrial forces, industry is likely to be less attractive if industrial forces overcome it. Therefore, the corporation needs to understand their operating environment, position the company for its success and make the best use of the limited available resources in the new markets. For the corporation to retain its attractiveness, they need to avoid market threats at all cost especially those posed by competitors in the information system industry

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