Week 6

1.What is meant by the term  “External Analysis” ?  What is the purpose of “PESTLE‟ analysis? 



External Analysis

Organizational Environment

External  analysis can be simply explained as the process of examining the threats and opportunities that exists in a firm’s environment . In any firm, threats and opportunities both exists independently. 
External analysis examines the two major environments for identifying the threats and opportunities for the firm. They are:-

i) General environments (Macro factors)

· Government rules and regulations

· Demographics (population growth, age)

· Various economic indicators (GDP growth, inflation, interest rates)

ii) Industry environments (Micro factors)

·Porter’s 5 forces model

It primarily focuses on choosing a industry where we should be as a company? And, industries with the highest profits potentials?

It focuses on, how to create and further enhance our competitive advantages over others by manipulating industry forces?

PESTEL Analysis

In simple words, PESTEL stands for Political, Economic, Sociological, Technological, Legal, Environmental. There are many other acronyms found for PESTEL which are STEEPLE, PEST, STEP and ETPS. It is considered to be a very important and handy tool to understand the “wider aspect” of the environment in which the organization is operating.

 Primarily, the purpose of a PESTLE analysis is to understand the major risks which are associated with the market decline or growth,  and such as the direction, potential and position for an individual business or an business organization / firm.

PESTEL analysis is used to find out the actual position of the business organization or products. 

It’s primary purpose is to bring up a useful picture of what the business or product’s future may look like and what further actions might be needed to be implied, or what’s and when should be the major action be taken through the various tools of PESTEL analysis like short term, medium term, external and internal environment and combined with risk analysis.

2. Read the article about Big Mart Super Store – what external issues are the Super Markets would have to consider at this time to have competitive advantage over others?

It is very important for every business organizations or super markets to perform a PESTEL analysis to identify, analyze and understand the environment where they would be operating, this could help them to formulate the possible best strategies to adapt with the changing environment and gain competitive advantage over other competitors. 

Big mart really needs to perform a PESTEL analysis so that they will be able to minimize their limitations and maximize their opportunities in the market by simply identifying their opportunities and limitations, which will also help them to gain competitive advantage over their competitors. Identifying the possible customers is very important for every super markets for which they need to do market analysis. Super markets also have to do their best to meet customer requirements which can be achieved by considering the buying behaviors of customers. Every super markets should have all possible and available knowledge and informations about their possible competitor organizations and also their strategies, so that strategies can be made to stay ahead of all the competitors.

Hence, these are some of the many factors that any super market or Big mart can consider to gain competitive advantage against other super markets.

3) Discuss your preparation for the activity field work. Have you arranged to meet group? Have you been to the Big mart before? How are you planning to record your data?

Well, we are planning to meet the manager of Big mart collectively as a group and put our queries infront of him/her. We will try to get as many information and data as we can from him/her regarding our task. Yes, we all have been to Big mart many time before, as a matter of fact, it is in the way to our college. All our group members have made out a set of questions that they would be asking with the manager, and as for recording the data we will be using note book to note down the data.

(Additional Task - Group Task)

Undertaking PESTLE analysis for Nepal higher education industry

Political
Political factors has a very major effect on higher education industry scenario of Nepal. The major issue in Nepal regarding the political factor is the instability, which is affecting the education industry very much. The number of college and schools are increasing day by day, but they are not maintaining the education standards.

Economic

Due to unemployment, higher inflation rate, political instability, purchasing power of Nepalese is very low. 40% of Nepalese are still under poverty line. Because of poverty and unemployment, youngsters are going abroad for employment rather than continuing their study. And many people in Nepal still can’t afford for the higher education. However banks these days provide student loan which in fact is a very good thing.

Sociocultural

Sociocultural environment is composed of different values, beliefs, class, social institution and customs of people and their expectations. For those who belong to good family it has become a trend to go abroad for higher studies. On the other hand there are still some people in Nepal who believe that education is not necessary. Instead of sending children to school and colleges, parents are sending them to rear cattle and help them in farming. But this trend is changing slowly because of modernization, now parents have understood the importance of education to their children.

Technological

Technological environment refers to the entire technical environment that affects an organization. It includes system, skills, methods and equipment. Use different advance technology for teaching purpose like projectors, computers, and internet has made study more fun and easy to understand. Technology has become an integral part for any industry to survive and stay competitive. Gradually Nepalese higher education is introducing technology for the education purpose.

Legal

There are certain legal procedures that need to be followed before starting any business and same for the higher education industry as well. They need to meet all the mentioned criteria and need to be registered for their operation.

Environmental

Nepal is very much diversified in terms of geographical location. There are still places where transportation hasn’t reached. So for the people in such areas higher education is still difficult.

Which factors impact the most at the present time? Why?

All the factors mentioned above impact the higher education industry in Nepal. However political and economic factors impact the most. Because of unstable political condition, schools and colleges are opening but they are not even fulfilling the minimum requirements and providing quality education. Regular and smooth operation of schools and colleges has become difficult because of political strikes. The other factor is economic, because of poverty and unemployment people can’t really afford for higher education. People are bound to work and financially support their family instead of studying.

Hence to make this situation better the first thing required is stable politics. And the other thing is employment to the people that raise the living standard of people and therefore they can afford for higher education.

What are the key factors for success in this industry? (What do you have to do really well to survive and prosper in the industry?)

Some of the key factors to success in this industry could be

• Analyzing the internal environment and external environment very well such as political, environmental, sociocultural, technological, economic, and legal. So that organizations are aware of the possible changes and could adapt those changes quickly to gain competitive advantage.

• Providing scholarships to the students who perform best which attracts students and motivate them in studying.

• Providing good infrastructures, quality education are other keys for success in this industry.