Analysis Of The International Business Environment Business Essay - Free Essay Example

In analyzing environment it is important to identify the factors that might in turn affect the numbers of vital variables that are likely to influence the organization supply and demand levels and it cost(Johnson and Scholes, 1993). Macro environment is accessed through PESTEL frame work which helps us to identify how present and future trends in political,economic, social, technological, environmental and legal environment might HP. HP operates in more than 170 countries around the world. We are going to identify how technology helps people and companies to address their problems and challenges by realizing their possibilities, aspirations and dreams. By implementing new ways and ideas which results in creating, good and worthy experiences with technology. The affect of +vital variables that are likely to influence the organizations supply and demand levels and its costs can be analyzed by the analysis of macro environment.(Kotter and Schlesinger, 1991; Johnson and Scholes, 1993). The radical and ongoing changes occurring in society create an uncertain environment and have an impact on the function of the whole organization (Tsiakkiros, 2002). The vast number of possible issues that might affect an industry is analyzed by PEST analysis that categorizes environmental influences as political, economic, social and technological forces.The analysis examines the impact of each of these factors (and their interplay with each other) on the business. Kotler (1999) cl aims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The purpose of PEST analysis is that it aims to increase the strategic understanding of The attractiveness and evolution of the industry The needs of identified customer groups The capabilities of other organization targeting the same customers To identify the key success factor (KSFs) to compete in an industry The PESTEL analysis examines the impact of each of these factors (and their interplay with each other) on the business. The result then can be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans (Byars, 1991). Main Aspects of PEST Analysis Economic conditions affect how easy or how difficult it is to be successful and profitable at any time because they affect both capital availability and cost, and demand (Thompson, 2002). F irms are interested to invest and grow with expectations of being profitable when the cost of capital is low and there is a demand in buyout. In opposite circumstances firms might find that profitability throughout the industry is low. Economic conditions influences the success and timing of the particular strategies. The opportunity to exploit a particular strategy successfully may depend on demand which exists in growth conditions and does not in recession. Although a depressed economy will generally be a treat which results in a number of organizations going out of business, it can provide opportunities for some (Robinson and et al., 1978; Thompson, 2002). The political and government policy are the main factors that influenced the economic conditions e.g Issue of whether European countries join, or remain outside, the single European currency is a case in point. At any one time either exported or imported goods can seem expensive or inexpensive, dependent upon currency exc hange rates. There are many other ways, however, in which government decisions will affect organizations both directly and indirectly, as they provide both opportunities and threats. While economic conditions and government policy are closely related, they both influence a number of other environmental forces that can affect organizations. Capital markets determine the conditions for alternative types of funding for organizations. They tend to be a subject to government controls, and they will be guided by the prevailing economic conditions. The rate of interest charged for loans will be affected by inflation and by international economics and, although the determining rate may be fixed by a central bank, as it is the case with the Bank of England, that will also be influenced by stated government priorities. According to Thompson (2002), government spending can increase the money supply and make capital markets more buoyant. The expectations of shareholders with regard to compan y performance, their willingness to provide more equity funding or their willingness to sell their shares will also be affected. In order to understand the presence of a number of required skills at both national and also at provincial or regional level, the understanding of labour market is essential and these skills are obtained through provision of training provided by either government or any other organizations. The Labour costs increase or decrease in accordance with the inflation level in the country or and region or by other events occurring in the industry as a whole is and mostly the labour cost is affected by the actions of trade or labour unions. The social and cultural environment of a country or an area where organization is based include in is self and affects the demand for a particular product and taste of the individual or consumers and these factors depend on and directly affected by the changes in fashion disposable income of people living in that area t ogether with general changes taking place in that particular environment (Thompson, 2002; Pearce and Robinson, 2005) The life cycle of a product changes with the time .A product life cycle start with a novelty when a product newly launched or a technology newly introduced and with the passage of time the product reached to its final stage of its life cycle on saturation with these changes an organization is required to therefore make changes in pricing strategy and also strategy to promote the particular product in order to suit the changing circumstances. There are products that are sold throughout the globe as they are since ages without any changes in either their make, shape, prices etc but the quantity of these products is very rare and unusual. In order to sustain it self in a volatile business environment an organization must be aware of its demographical composition or targeted market segments such as aging population working patters religious belongings ethnic backgro und etc as these factors have very important and significant affect on demand of the product organization provide. With these demographic changes come change in demand for particular product and services which may pose threat but also present an opportunity for the organization to introduce new products or services or to amend and differentiate the existing product. Technology is widely recognised by various literature on strategic management (Capron and Glazer, 1987; Johnson and Scholes, 1993; Jan, 2002), Technology plays a vital role in developing a competitive advantage of any industry in a business sector. In some conditions the government supervise some organizations to get competitive edge over other due to national interest.Advancement in technology is a is a biggest threat to those industries who are not getting technological edge in their business and products which is ultimately going to a loss in market share. Vice versa an industry which keeps its Equally, new t echnology could provide a useful input, in both manufacturing and service industries, but in turn its purchase will require funding and possibly employee training before it can be used. Palm, Inc. and Hewlett-Packard announced that HP would be acquiring Palm for 1.2 billion in cash and debt,[27]the deal officially closed on July 1, 2010.[28] In the months leading up to the buyout it was rumored that Palm was going to be purchased by either HTC, Dell, RIM or HP. The addition of Palm handsets to the HP product line provides some overlap with the current iPAQ mobile products but will significantly increase their mobile presence as those devices have not been selling well. The addition of Palm brings HP a library of valuable patents as well the mobile operating platform known as webOS. Briefly discuss the industry of sector: HP has successful lines of printers, scanners, digital cameras, calculators, PDAs, servers, workstation computers, and computers for home and small busines s use computers; many of the computers came from the 2002 merger with Compaq. HP today promotes itself as supplying not just hardware and software, but also a full range of services to design, implement, and support IT infrastructure. HPs Imaging and Printing Group (IPG) is the leading imaging and printing systems provider in the world for printer hardware, printing supplies and scanning devices, providing solutions across customer segments from individual consumers to small and medium businesses to large enterprises.[33] Products and technology associated with IPG include Inkjet and LaserJet printers, consumables and related products, Officejet all-in-one multifunction printer/scanner/faxes, Large Format Printers, Indigo Digital Press, HP Web Jetadmin printer management software, HP Output Management suite of software, LightScribe optical recording technology, HP Photosmart digital cameras and photo printers, HP SPaM, and Snapfish by HP, a photo sharing and photo products servic e. On December 23, 2008, HP released iPrint Photo for iPhone a free downloadable software application that allows the printing of 4 x 6 photos Key success factors International strategies (Competitive analysis) SWOT strengths Strong brand equity Diversified product portfolio (offerings spans personal computing and other access devices; imaging and printing-related products and services; enterprise information technology infrastructure, multi-vendor customer services, consulting and integration and outsourcing services) Solid market position in key segments Strong financial condition  opportunities Emerging markets, particularly BRIC countries e-Commerce expansion Restructuring of internal IT structure Imaging and printing businesses Weaknesses Internal control issues Lack of in-house management consulting division No aggressive investments in RD compared to historical spending Unrest among internal employees due to pay cuts and lack of people care Intellectual Capital is under estimated No Good People retention policy or HR practices to ensure IC is protected Threats Intense competition from other PC manufacturers Increasing competition on imaging and printing Slowdown in economic conditions in US, Europe Product recalls and supply chain disruptions   Move into new markets Evaluate your company strategies with other different companies Organisation strategy HPs Office of Strategy and Technology[37] has four main functions: (1) steering the companys $3.6 billion research and development investmen t, (2) fostering the development of the companys global technical community, (3) leading the companys strategy and corporate development efforts,[38] and (4) performing worldwide corporate marketing activities. Under this office is HP Labs, the research arm of HP. Founded in 1966, HP Labss function is to deliver new technologies and to create business opportunities that go beyond HPs current strategies. An example of recent HP Lab technology includes the Memory spot chip. HP IdeaLab further provides a web forum on early-state innovations to encourage open feedback from consumers and the development community.[39] Bench marking Porters demand perform the Industry Analysis it is better to follow Michael Porters five forces model. This analysis framework was created so that it helps managers in their task to analyze competitive forces to the company. (Hill Jones 80) This model is only one of the models that can be used for this task but it is one of the more popular models. Th e five forces that we will have to look at for this model are (1) the risk of new and potential competitors; (2) the bargaining power of suppliers; (3) the threat of substitute products; (4) the bargaining power of buyers; and (5) the degree of rivalry among established companies within an industry. (Hill Jones 80) The first force in Porters Five Forces Model is Entry Barriers. These factors are those that make it harder or easier for another company to enter into the industry. High barriers to entry will keep potential competitors out of the industry and low barriers to entry will give an opening for competitors to enter into the industry if the industry returns are high enough. (Hill Jones 82) The fewer competitors in an industry the more the existing companies can take advantage of higher prices and better returns.  Analysis marking GE marking and shell marking Effectiveness of international strategy Firm market entry strategy Growth strategies Potential development over 10 to 20 years Appropriate justified recommendation for improvement, development and international