Current External Business and Industry Environments
The external environment comprises of all the entities that exist outside its boundary, but have a significant influence on its growth and survival. These are those factors bearing on the business. TMT consulting has little or no control over its external environment. TMZ needs to monitor and adapt to external changes either proactively or reactively which will lead to a significantly different outcome.
The business environment is dynamic. It keeps changing either regarding technological improvement, shifts in consumer preference or entry of new competition in the market.
The business environment is uncertain. It is challenging to predict future needs of the clients that TMZ deals with. Especially when environment changes are taking place too frequently as in the case of information technology.
The external environment is broken down into two types: the microenvironment and the macro environment. The microenvironment is the factors that directly impact the operation of the company. While the macro environments consist of general factors that business has typically no control over. The business success operates purely based on its adaptability.
Five factors affect the microenvironment namely the suppliers, customers, marketing intermediaries, financiers and public perceptions. Customers are a requirement for the business. TMZ targets established mid-size private firms and other organizations that have developed change fatigue. Without these organizations requiring the services, TMZ will close its doors. Clients also demand satisfaction on the services offered. The sales of the service are critical to TMZ survival and growth. Customer satisfaction is integral.
Suppliers who supply the various inputs that the company requires. TMZ has minimal supplier requirements. The supplies are likely to be office supplies and internet provider firms.
Marketing intermediaries are the essential part of TMZ. The middlemen such as agents who will be critical in getting customers. Marketing intermediaries are responsible for advertising and selling the ideas to the right markets. It is an important link between TMZ and its clients. A dislocation will adversely affect the business.
Financiers of the firm; to get started TMZ will take need a loan and the growth of the firm depends upon their ability to obtain additional loans. TMZ though requires low capital investment for startup.
Public perceptions. How does the public view the services of TMZ. Are they open to the services offered by TMZ. The key is to create awareness of the services provided by TMZ.
The macro environments are also known as the general environment. Compared to Micro factors this is more uncontrollable. The success of TMZ will depend on its ability to adapt. It is affected by six factors, economic, sociocultural, political, legal, technical and environmental consideration.
The social dimension of a nation determines the value system of the society; this, in turn, affects the functioning of the business. Customs and conventions have an impact on the firm. The focus area of TMZ organizational culture change makes the business more acceptable socially. Lifestyles and beliefs may also affect the nature of TMZ business. Are the clients responsive to the variations in the social structures?
The political environment of a country, influenced by the political organizations such as ideology of government, philosophy of political parties, etc. If the political situation is not right, it may affect the conducting of the business. Any change in government policies that relate to organizations will affect TMZ and necessitate the company to adapt to the new policies.
The legal environment which includes flexibility and adaptability of the law and other legal rules governing the business.
Technological development affects all business. The type of technology used determines the output delivered. Variation in technology puts the business at the constant peril of change to suit customer needs.
Economic conditions affect the working of the firm. When the economic system of a country is good, the business can grow and expand. Poor economic conditions make the environment more complex and change efforts or consultancy will not be adopted.
The industrial environment is mainly composed of competitors, suppliers, and buyers. There other factors like the political, legal, technological aspects that are part of the environmental analysis.
Using the Michael porters developed framework, the nature of competition within the industry is analyzed.
The five forces act to increase or decrease the competitive forces within the industry.
The bargaining power of your customers. There is several consulting business in the industry offering variety of consulting services. TMZ has a major competition as many firms offer the same services.
The second is the threat of new entrants into the industry. Few restrictions imposed by regulators weaken the business position.
The third is the bargaining power of suppliers. The business is dependent on suppliers is low. The key suppliers are office supplies and the internet provider firms. The vendors of these items are many thus more power to negotiate.
The fourth is the threat of substitute services. The risk is medium as the niche focus is (organizational culture change) is a challenging specialization to master. Though their other consulting firms providing other services.
The fifth is the rivalry among existing firms. Many entrants are entering the market which puts TMZ in a very competitive spot. Despite it being an area with a high client demand there is also a high completion intensity.
The External Environment. (n.d.). Business Management for the Equine Industry, 35-52. doi:10.1002/9780470751145.ch4
Ward, J., & Peppard, J. (2002). Strategic planning for information systems. Chichester, West Sussex: J. Wiley.
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