Chapter2 The business environment ACCA F1 Chapter2 The business environment

How to analyze the B.E.? Identify the environment Political Economic Social Technological Analyzing the environment SWOT analysis Value chain Five forces analysis

Environment Definition: everything that surrounds an organization, physically and socially. Environment should be analyzed by every organization, because it is related to the organization’s strategy. Environment is changing, so it is a source of uncertainty.

Types of environment Global and local environment General and task environment General(macro) environment covers all those factors influencing all organizations indirectly, e.g. PEST. Task(micro) environment includes those areas which have a direct impact on the organization, e.g. five competitive forces.

G.E.-political and legal in general Government’s function: some policies Political risk and political change International organization: EU and WTO Basic legal environment: general legal framework and some important laws(company law, contract law, tax law, etc.)

G.E.- other legal factors Employment protection: including some requirements about retirement, resignation, dismissal and equal opportunity. Data protection and security The Data Protection Act 1998 Privacy: the right of the individual not to suffer unauthorized disclosure of information. Healthy and safety: the duties of employer and employee, and some policies

G.E.- other legal factors Consumer protection: the contract between seller and consumer refers to some consideration Contract: a legally binding agreement. Environmental protection

G.E.- economic environment Chapter 3 and chapter 4

G.E.- social and demographic Population and labor market：如人口老龄化 Family life cycle 家庭生命周期 Social structure and class Socio-economic position Buying patterns Cultural trends: healthy and diet, women’s power, environment protection, etc.

G.E.- technological environment The development of IT system may flatten the organization’s hierarchy.-chapter 5 Other effects of IT system SOHO and home working Outsourcing 外包

T.E.- SWOT analysis Internal appraisal External appraisal Strengths- using strengths, resource-based strategy Weakness External appraisal Opportunities-exploiting opportunities, position-based strategy Threats

T.E.- value chain Value activities: the means by which a firm creates value in its products. Primary activities Inbound logistics Operations Outbound logistics Marketing & sales Services Support activities Firm infrastructure HR management Technology development Procurement

T.E.- Porter’s five forces model The threat of new entrants to the industry The threat of substitute products or services The bargaining power of customers The bargaining power of suppliers The rivalry amongst current competitors in the industry