Strategic Business Environment

Online Business Environment


The issue of speed is growing issue for internet business. Many managers view that there is an ever increasing pace of technological change and speed of communication. Within the business environment there are a number of layers to consider as illustrated below:




The Macro-environment a good starting point is a PESTEL framework that contains: political, economic, social, technoligcal, environmental and legal environments. This provides the data for which change can be established. This provides internet businesses with the necessary tools to see how the business environment might change.


Example: Your a book store selling online and its clear from a pestel framework that there is a social and technological change towards handheld mobile devices.





The next layer within the industry is a group of companies in the same market. Michael Porters Five Forces analysis would be best used to analyze competitors. The threat of competition can be viewed by the following model:


As a critique to the model, it could be argued that if your watching your competitor then your analyzing the wrong thing. To create value in a product is not to copy competitors but out maneouver them. Take chess as a good example what your competitor does is important, yet it doesnt change your ambition to get the king. What they do around you is irrelevant as long as you get the King. If your a small retailer trying to compete against a large retailer, it is insignificant whether you have more pieces on the board or not but its the way you move your pieces to out maneouver the competition that matters. You don't necessarily need to focus on their moves as your own moves dictate what your business is about, not the role of competitors.

E.g. Supermarkets you could spend years analyzing all elements of their business but your goal could be very different than theirs. Is copying them going to achieve anyting. What matters most in a competitive environment is the consumer. If your in a position to exploit an area of the market and serve the user well then your on to a winner. Don't get me wrong I love supermarkets but I feel that they can spend too much time looking over the shoulder rather than infront and to the future.

Once these frameworks have been thoroughly explored it is best to start to build Scenarios. Scenarios are detailed viewes of how the business environment may develop. Scenarios are vital for the long term view of strategy, it is important to focus on the keyfactors where there is a high level of uncertainty about such changes. Therefore in 5 years scenario you could look at cloud computing and how it will affect your organisation.

E.g. If your an accounting company can you get a programmer to build your program to fit on a platform in the cloud rather than on the desktop. Is this where the company could be in 5 years?

Critical Success Factors known as CSFs are features that are valued by your core customers and an area that you must excel at. Critical success factors can vary over a number of areas yet I view them as: reputational, after sales, deliverables, testing, quality. Plugging a product into these areas will view whether you have satisfied your CSFs and whether they match your strategy.

Questions: Is it up to quality? Is the aftersales up to scratch? Is it deliverable? Does it work? How well does it work?

A strategic gap is an opportunity in the competitive environment that has not been thoroughly developed.

Opportunities



Subsitutes - as a substitute good e.g. a map on a mobile device

Other strategic groups - e.g. desrestriction in China allows for a breakthrough in an emerging country.

Complementary products - e.g. Amazon sold books then sold CDs, DVDs

New Market segments - transforming a traditional market into a new one e.g. Microsoft with



SWOT

SWOT (Strengths, Weaknesses, Opportunities & Threats)



The aim of swot is to identify the current strengths and weaknesses and their relvance to dealing with the threats or capitalising on the opportunities in the business environment.