Globalization is the movement of domestic and national markets to an
international level. The factors leading to globalization is the advancement in
communication which has had huge benefits for the people. Quicker travelling
methods and reduction in barriers to enter new places.
It has a lot of advantages like if Nike opens it factory in Pakistan it
would benefit immensely all of the raw materials being there.There will be
cheap labour while a huge capital will be invested for Pakistan which will be
very good for their economy.
It has disadvantages to like it is a big threat for small businesses as
bigger companies may effect from economies of scale taking place. One of its
biggest disadvantages is that if a country faces recession the effect is faced
by the other countries to. Globalization can also cause instability within a
country as well as technological poverty.
International Trade
From the past hundreds of years trading is taking place internationally
just with a little bit of difference people had to travel on animals where
communication was very limited. International trade could take place through
many ways out of which the first one could be outsourcing and the other is
importing and exporting out of which this is all part of international trade.
With international trade the PESTLE tool can also be used for trading
internationally. The political factor is very important over here. For any
country for international trade to take place it is gonna be very difficult to
take place in a place where there is a lot of corruption.Economic factors is
also very important over here, like for Pakistan we have good quality fruits so
selling in places where there is no access to good quality fruits sell the
fruits over there. The culture should also be looked upon which is very
important. You just can not sell anyone that is against their interests. There
is technological and environmental where it is mostly about natural resources.
So PESTLE helps us finding the external factors that
might effect the organisation as a whole.
Forces in the wider world also tend to shape management policies. This is where a PESTEL analysis comes in which stands for political, economic, socio cultural, technological, environmental and legal help to identify these.
Lets see how each of these factors will effect Sony.
Political and legal would be that political factors of Sony can be changed anytime which could effect it at any time of change. Instability in a political situation of a country will effect the business. Reduction in recession could cause Sony to speed up its change, meanwhile same thing can happen with the competitors of Sony which may effect Sony negatively. Sony needs to follow the rules and regulations set up by the government. By change in the politics of a country the condition of the business environment may stay the same.
For economic factors it is the essential factor by which the growth of an economy could be assessed. It would cover the major aspects like unemployment and wages. However the economic condition of Sony was not reported in good condition because of the economic shrunk. Due to this the exchange rate was effected which could be related to Sony because it is a international business.
For social even though Sony has gained reputation cause of the quality goods and services they provided they still need to be well aware of the customer demand and changes in the lifestyle of the people. Sony needs to consider most of the educational factors and must have social involvement in the most needed things for the people.
One of the four important factors which is essential for the company to assess its external environment are the technological factors.Sony works around the technology everyday. For this they should use new and upgraded technology in productivity which may give Sony competitive advantages making it the market leader. By using the new technology it can do research by which it can respond to the demand of its customers.
An organizational structure defines how certain activities like allocation, coordination and supervision are directed towards the achievement of the organisations aims. An organization can be structured in many different ways basically depending on their objectives. The structure of it will determine the way in which it will perform and operate. It allows the allocation of responsibilities for different functions and departments of the business. There are many forms of organizational structure types. Chain of command is also one thing which was discussed in one of the classes which is basically the communication network. Then there is the span of control which is the number of subordinates who are responsible to report directly to an appointed manager. There are two kinds wide and narrow in which if it is narrow there will be many management levels and if it is wide there would be more people working under one manager. Centralized decision making requires more communication where as for the decentralized decision making is quite strict. The matrix structure was also mentioned it actually is like project management. It works well within a functional structure.
The porters five forces is a simple but powerful tool which basically tells us where or if power lies ahead in the business. This is important because it tells you the strength of your current position and the strength your considering to move into.
Through this you already knowing where strength in the business lies which will avoid you from taking the wrong steps which can cause a loss for the business.
It analyses that there are five forces that will determine competitive power in business situation.
The first is supplier power through which it is easily assessed for suppliers to drive up prices. This is driven by the uniqueness of the product their strength over you and the cost of switching on from one to another.
Then comes buyer power here it is said how easy it is for the buyers to pull down the prices. Again this is driven by the number of buyers the importance of the buyer for your business and the cost of switching from your products and services to someone else business.
The third is competitive rivalry, what is important over here is basically the number and capability of your competitors. If you have many competitors and they are offering the same products as you then you have no gain from this situation as suppliers and buyers might go to someone else if they do not get a good deal from you. But if no other business can not offer what you are offering then this is a very strong position for you.
Fourth is threat of the substitution which is reflected by the ability of your customers to find a different way of doing what actually you are doing. If substitution is easy you have no power over here more of a weakness.
Fifth and final one is the threat of new entry in which power is effected by the ability of the people to enter your market. If there are few economies of scale and you have little protection the new competitor can easily and quickly enter your market and weaken your position. If you have strong barriers to entry then you have a fair advantage over the situation.
Porters five forces are very important but also using it gives you a slight picture of what it looks like. Also in now days there is like a huge advancement in technology there is an increase in the industries which makes you realize you have to take your competitors seriously. You yourself have to bring innovative thinking and offer something that your competitors just can not.
Here is the video that we were shown in our class. Over here porter himself explains the five forces.
Strategy is one of the most important factors of running a business without a plan or a strategy in mind the business cant do anything through which it will gain something. People have different opinions of the word strategy. Mintzberg thinks its a pattern in a stream of decisions while Chandler says that it is the determination of the long run objectives of an enterprise. In strategy basically there are three levels out of which one is the corporate level in which decisions are the most important over here out of which most important is the decision taken by the head of the business which is the resulting scope and idea of the business. The second is the business level in which it is seen how the individual business units compete in the market. These decisions are taken by the managers like the marketing manager. And the last is the operational level where day to day decisions are made. There are two types of strategies firstly the one which are planned to achieve the future goals of the organisation which are called deliberate strategies. While some of the other strategies are made automatically they are not made intentionally they are called emergent strategy. Another important thing we came across in our lecture is the SWOT ANALYSIS. Understanding the method of the swot analysis is quite simple it is simply taking information from the environmental analysis and separate it into strength and weaknesses and opportunity and threats. In the swot analysis comes the strengths, weaknesses, opportunities and threats. All of these are the main parts of a swot analysis without them it can not be performed. The usefulness of swot analysis is not limited to profit seeking organisations. It can be used in any decision making area. Examples include non profit organisations, government units and individuals. Like for my own opinion Samsung for example can not focus on smart phones as they have diversified into many products. According to me Samsung has the most chance to grow in the Asian market they having a lot of demand over there mostly for there cell phones.Samsung no matter how high or low they set their profit margin the competitors will follow Samsung.
