Forces that can Influence an organization and its strategy
- Internal forces
- Impact of External forces
Today’s national and international organizations are surrounded and affected by different types of forces. Two main categories can be identified, the internal forces and the external ones from the task and general environments (Appendix 1). They influence companies’ strategies through multiple and various powers. Therefore, those forces need to be analyzed before any strategic move.
Several questions need to be posed and answered before an organization decides if it is too risky or not to get involved in any strategy, in any opportunity (Mouillot, P. 2007). They correspond to the dimensions present in PESTEL analysis and in Porter’s Five Forces Model: Political, Environmental, Social and Cultural, Environmental, and Legal environments, and competitive pressure, availability of substitute products or services, consumers’ power, ease of market entry, and supplier’s power. Other stakeholders like workers and shareholders can also have a strong impact on organizations’ strategies.
Firstly, I will identify the various competitive forces and the stakeholders’ powers, which can influence strongly and affect organizations and their strategies. Afterwards I will do the same analysis for the external forces of the environment. To avoid undergoing and suffering from their power, a company has to analyze its environment; therefore, I will spot out what are their impacts on business, and then, express some solutions to overcome these influences. I will base my analysis through various examples to determine the forces that affect or change the strategies of the organizations concerned.
Henry Mintzberg has been a provocative, influential voice in the general management discussion (Mintzberg, H. 1991). His work is based on how effective organizations manage the contradictory internal forces that can so easily tear them apart. For him, the danger is when those forces begin to have a significant efficiency in deteriorating an organization (Mintzberg, H. 1991). The five forces model permits organizations to evaluate the potential impact of all relevant competitive industry forces on a firm’s performance.
Firstly, each organization should ask itself “what is the level of negotiation power of my consumers?” (Mouillot, P. 2007). Their power is usually measured by how much influence a single consumer or group of consumers has on an organization’s operating procedures (Mayfield, M. and J., Genestre, A., and Marcu, M. 2000). For instance, governments possess a strong power over all the organizations they are in contact with. Ownership’s risks can be an impact on organizations, like expropriation. But different situations like loyalty and consumers’ associations, give power to consumers. If a consumer likes luxury clothes but is part of PETA, association against animal fur’ clothes, then it will choose only brands that don’t offer any clothes made of animal furs.
[...] Thus the organization has to deal with several legal steps. The economic environment is particularly significant (Mayfield, M. And J., Genestre, A., Marcu, M. 2000). An organization strategy rests on the stability of the economy and the opening to the competition (Levanti, P., Lucias, L. and Studer-Laurens, J. 2006). Actually, during recession the powers can be inverted and consumers will be attracted by cheap prices. Every business has rules to follow, notably about competition. The local competition is the most impressionable as some host countries and their legal systems are far more likely to support native organizations than foreign producers. [...]
[...] J. and Leventhal, R. B. 1987). As a matter of fact the legal dimension that can affect business is always related to one of the competitive forces or stakeholders. Laws are mainly here to balance the needs of all the stakeholders and the benefit of the organization, and to assure coherence between all the forces. Political, social, economic and legal environments can all have a strong impact on an organization’s duty towards its stakeholders, notably its employees (Halmos, C. 1990). [...]
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