Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
When studying the macro-environment, I found it essential to recognize the factors that
may in turn change a number of critical variables, which are likely to sway an
organizations supply and demand levels. Often the major ongoing changes that are taking
place in society produce an unclear environment and could have a negative influence on
the organization. Checklists have been developed as a way of sorting through the vast
number of possible issues that could affect an industry. There is the Porters Five Forces
Model, which is merely a framework that analyzes macro-environmental influences by
potential competitors, intensity of rivalry, bargaining power of buyers and suppliers, and
closeness of substitutes to an industrys products. Analyzing these five forces, examines
the impact of each on the switching costs and government regulation. The results can then
be used to take advantage of opportunities and to incidentally plan for threats when
preparing business and strategic plans (Hill, Jones Seventh Edition 2007).
It appears the Porter Five Forces Model is a useful strategic tool for understanding market
growth or decline, business position, potential and direction for operations. The categories
for this model are a framework for reviewing a situation, and can in addition to SWOT and
the areas of the macro-environment, be applied by organizations to review strategic
directions, including marketing proposals. The use of this model can be seen as effective
for business and strategic planning, marketing planning, and research and development.
The Porter Five Forces Model can also ensure a companys performance is associated with
the powerful forces of change that are affecting business environment. This model can
also be useful when a company decides to enter its business into new markets or new
countries. In this case, the model helps to break free of unconscious assumptions, and
help to effectively adapt to the realities of the new environment. (Hill, Jones Seventh
Edition 2007).
It is fair to assume that economic conditions affect how easy or difficult it is to be booming
and profitable at any given time, because they affect both resource availability and cost,
and also demand. If demand means to takeover, for example, and the cost of resources is
low enough, it could be smart for firms to invest and grow with the potential of making
money. On the other hand firms might find that profitability throughout the industry is
low. Relative success and timing of particular strategies can be influenced by economic
conditions. If the economy, in large is growing, demand may be present for a product or
